Managing huge volumes of data can be a major challenge for business organizations operating in diverse sectors. Storing different types of data (like emails, invoices, receipts and other documents) in cabinets and folders and retrieving a file from this huge pile of documents and organizing these documents can be a tedious and time-consuming process. Implementing a specific data management initiative can help improve the quality of data. Digitizing all paper-based documents with the help of a data conversion company can provide easy access and help analyze and present information in an effective manner. As businesses have started embracing digital solutions that simply transform the way a company functions, virtual data rooms (VDRs) have emerged as a common solution for storing and sharing a huge amount of sensitive corporate information. A VDR is a unique and secured online platform for the simple and organized sharing of confidential documents with third parties during due diligence for mergers and acquisitions (M&A), fundraising, and IPOs. In fact, VDRs have completely remodeled how businesses make deals these days.
What Is a Virtual Data Room (VDR)?
As the name implies, a virtual data room, or a “VDR,” is an online repository of information which companies use for storing and distributing important and confidential documents. These documents can be easily organized, shared and tracked all within the data room administrator’s control and discretion. These have become a perfect platform for supporting complex projects and business processes that require the disclosure and sharing of confidential documents with third parties beyond the firewall. A VDR offers detailed activity tracking of data by allowing its users to view which documents have been accessed by whom. In addition to aiding in security audits, this information about data access by users and document activity is particularly beneficial during sell-side M&A transactions or fundraising as this allows users to test the level of interest shared documents are inciting with potential investors.
Why Use a Virtual Data Room?
Requiring a hefty due diligence, virtual data rooms have now become the perfect norm for financial transactions. Although VDRs were originally designed for mergers and acquisitions (M&A) transactions, (and are still used for M&A due diligence), they are now being used in a wide range of other industries like – investment banking, litigation, funds and private equity firms, biotechnology and pharmaceutical firms and mining and energy companies that involves huge cases of secure file sharing. In fact, they are considered the safest bet to carry out financial deals, in a way more than a physical data room. Easy access of VDR software from anywhere around the globe, makes it simple to conduct deals internationally.
One of the major benefits of using a VDR is that all confidential information (whether it’s related to financial, HR, intellectual property or clients’ legal documents) will not be seen by third parties unless you grant them permission to access. Complex permission settings also ensure that only the right people will view the right data at the right time. An intuitive user interface allows for quick navigation through folders and files, so third parties can quickly find the documents they need to review. In addition, its unique capability to upload large volumes of documents, track and audit user and document activity, and set specific user permissions are vital for facilitating efficient and secure document sharing. In simple words, companies depend on VDRs to keep their most sensitive documents safe. These innovative capabilities have made the VDR a vital online tool for supporting complicated business transactions wherein prime importance is given to safety and efficient sharing of files or information.
Core Benefits a Virtual Data Room (VDR) Offers
As there are many different things that tend to take place inside a virtual data room, with different users performing different tasks they have been delegated to do and all the documents that come along with it, the whole process of data management can get hectic. A good VDR will allow administrators to organize, control and track documents throughout the entire process- right from start to finish. Here discussed are some core benefits a VDR offers –
- Security – Virtual data rooms offer a high level of security similar to that of financial institutions and major banks. Investing in a VDR involves paying for the utmost security of your sensitive documents. With stringent security capabilities and compliances in place, maintaining the confidentiality of the information is a key aspect that needs to get ensured. In such cases, people do not have to get worried about their piece of information being stolen or misappropriated. For instance, multiple physical data centers tend to implement key card access along with fire control and multiple backups. With major internationally recognized security compliances, and customizable user permissions for complete control in place, the documents shared via the VDR platforms can be accessible only by the right third parties at the right time. On top of that, all data is encrypted at rest and in transit and protected behind multiple firewalls to mitigate the risk of a breach.
- Ease of Use – As business processes or transactions involves sharing and reviewing thousands of documents on a regular basis, organizing and accessing these documents is crucial. Folders and files that are highly structured must comply with strict guidelines on how they are organized and numbered. This is an important aspect, in cases wherein multiple counterparties and reviewers involved in the process can access and review the documentation in a fast and efficient manner. Files and folders, when clearly organized and numbered, can help reviewers find the exact files they need to review, search and versioning without delay and keep the whole process moving. Document sharing and management within a VDR is made easy with folder templates such as due diligence checklists and drag-and-drop upload features, saving time and energy when filling a data room with complex document and folder structures. On the other hand, for intricate transactions that involve revisions to documents, versioning is an important tool that makes the latest versions of documents easy to find and review.
- Document Control – One of the innovative features of a virtual data room is that it reduces the risk of human error by allowing a specific user to ensure that the right third parties can view the right type of documents at the right time. Several security measures like – document expire; disable print/download; and dynamic watermarks can be configured at an administrator’s discretion. Customizable permission settings (either user- or group-based) provide greater control over who has rightly accessed certain documents within the data room. Before a data or document being shared, an administrator has the option to set an expiration date/time or revoke access remotely at any point (during the transaction) for digital rights management. In order to avoid data leak or unwanted document disclosure, a VDR administrator can opt to watermark every page of an electronic document or spreadsheet, or choose to completely disable print or download features. Activity reports allow an administrator to track and audit the activity of users or documents.
Going digital and keeping your documents in a virtual data room ensures that all your company data and documents are safe and secure from human negligence. Virtual data rooms have been gaining huge significance as a large number of companies around the globe are using this innovative technology. Big companies are placing huge importance on the ability to understand and leverage complete data sets as a means of gaining competitive advantage. VDRs have become a tried and tested method to share intimate documents and files (both internally and externally). Partnering with a reliable data entry company will help ensure good quality, accurate sharing of business data. The support of a professional company makes data management much easier as all crucial data of a business can be easily converted into digital format with the help of data entry services. A good data management system, if implemented in a correct and effective manner, can help manage huge volumes of valuable data in the most efficient manner.
