Beneficial in Different Aspects: 4 Reasons to Start Using Virtual Data Rooms

Virtual data rooms were created as an alternative to physical data rooms during due diligence in mergers and acquisitions.

The use of virtual data rooms, or VDRs, is gaining momentum. Today, they are favored by companies from the biotech, legal and public sector, consulting, and many others. Statistics support the demand – a study published by Markets&Markets estimates the virtual data room provider market will be $1.8 billion by 2022, with an average annual growth rate of 14.8%.

Why Do Companies Use Data Rooms?

Essentially, virtual data rooms are advanced cloud-based, collaborative document repositories that provide a high degree of information security and control over their processing, minimizing any risks of unlawful use.

The most common uses of VDRs are: 

• document storage (originals, scanned copies, drafts, etc.), 
• document management (uploading, downloading, viewing), 
• access control. 

Additionally, VDRs offer additional features for user convenience and information security: 

• full-text search, 
• multiple language support, 
• tools for signing documents electronically, 
• approval tools, etc.

Online data rooms help to solve many of the problems a business faces during a transaction:

– Structuring and organizing all documents (text, photos, video, audio, etc.).

– Quick and easy provisioning instead of sending a document via email or standard mail.

– Granular access to documents from any device.

– Fast and secure discussion of documents inside a room (comments to documents).

Further, we will tell you about the advantages of virtual data rooms compared to other systems for working with documents.

Advanced Security

Many VDR vendors offer advanced security features that allow data to be scanned for malware, restricted viewing, file encryption, watermark, layered system of permissions to access information, and digital rights management. All this allows you to minimize the risk of getting to third parties. 

There is a solution whose developers went even further to protect information from unscrupulous employees working with documents. They have introduced ILD (Information Leaks Detection) technology. To learn more about the most popular ones, visit datarooms.org – virtual data room providers. ILD is an advanced document leakage control system based on a patented labeling algorithm. It allows you to create new copies of a document while working with it (for example, when you open it or send it off to print). One of the main ILD advantages is creating a complex protection mechanism that connects to the information displayed on the screen and to paper documents that traditionally are not protected from unauthorized transfer to third parties. 

The system’s main advantage is that it guarantees detection of a security breach even by scanning a paper copy or a document photo from the computer screen. Thus, knowing that the culprit will be detected in any case perfectly protects you from “leaks” of sensitive information.

Increased Workflow

Participants in business processes are interested in handling data as quickly as possible. An online data room guarantees a high speed of data uploading to the system and synchronous launch of several processes simultaneously. Another important factor is that there is no need to meet personally between the process participants and resolve issues remotely. Moreover, the document collaboration feature allows you to update documents on the fly (without downloading them to a local computer).

VDRs have many tools that greatly simplify the process of merging companies. Today it is one of the most popular formats for using VDRs because large amounts of confidential information are exchanged during the M&A process. Therefore, the faster and more accurate statement is transferred between the parties to the transaction, the more likely it is to be successful. In addition, VDRs direct the flow of information only to the right hands, saving time and reducing costs. 

Cost Efficiency

Dataroom software saves money on hardware purchases and the cost of deploying and maintaining a data center. In addition, with them, you can save on software purchases using provider applications.

Currently, virtual data rooms accompany the activities of companies in other areas, from providing information to partners of investment funds to obtaining certificates of medicines. It is necessary everywhere to provide convenient temporary access to confidential information for a certain circle of people who may be thousands of kilometers away from each other.

Risk Management Regulation

In a process that requires quick, error-free decisions, the last thing a business wants to worry about is how to get an important document from counterparties quickly. Virtual data rooms allow businesses to share documents with different users, quickly uploading the information they need to the company’s browser. It makes it possible not to miss the moment when an investment suddenly loses its appeal to potential buyers and quickly changes tactics.

Additional Benefits of VDR

An additional benefit is the potential for territorial coverage. The proper use of an electronic data room for appointments and meetings, for example, can turn a local business into a regional business because it can invite new customers from all over the world to work with it as an equal. The use of VDRs demonstrates compliance with growing security and communication standards. They are simple, straightforward, and provide the team with a secure place to collect data and information together without using the resources of their computers or servers. Dataroom benefits the team internally or gathers customers externally.

Reliable data protection, the ability to solve problems quickly, and increase the speed of business operations are major benefits of VDRs. And in a world where information is almost the most valuable resource, such qualities are especially in demand.