Virtual data rooms were sort of underrated business solutions for about a decade, but the business fraternity has finally realized the unparalleled importance of data room software. What was considered as a facilitation tool for mergers and acquisitions is now a primary choice for data management in almost every business sector.
If you have not heard about this cost-cutting, high-end technology, then this guide is tailor-made for you. You can explore how data room software can revolutionize your business or professional career.
What is a digital data room?
Virtual data rooms are cloud-based business solutions that can be used as:
- A secure data repository for storing, organizing, sharing, and managing confidential or regular-use business documents.
- A deal room for undertaking complex business and financial transactions, including acquisitions, mergers, asset purchases, auditing, fundraising, and initial public offerings.
- An online workplace where employees, professionals, project teams, freelancers, service providers, and independent contractors can collaborate and communicate safely.
Why are virtual data rooms different from other data storage platforms?
If there are hundreds of free online data storage platforms, then what makes data rooms different? Here are their main peculiarities:
- Security. Virtual data rooms are cloud repositories hosted by certified data room service providers. These vendors employ numerous layers of security at different levels in the VDR. Most importantly, a certified vendor complies with basic-to-advance security standards like SOC2, FINRA, and ISO27001.
- Easy data access. An electronic data room simplifies the data access process. Virtual data rooms give you the freedom of accessing your data from anywhere, using any device like a laptop, smartphone, tablet, etc.
- No third-party involvement. Free data sharing and storage platforms often work in collaboration with third parties, which increases the chances of data leaks. However, virtual data rooms make sure your data is accessible only to your or authorized users.
What is a virtual data room used for?
1. Centralized data storage
Businesses from different industries use digital data rooms as primary data storage options. Virtual data rooms give you the luxury of storing your business data on a centralized platform. That means you don’t have to protect your business data on multiple fronts.
2. M&A due diligence
Mergers and acquisitions were the first use case of virtual data rooms. Corporations and enterprises use data rooms for sharing and managing huge volumes of data in M&A transactions. VDRs help connect sellers and buyers in a secure platform.
Advisors use virtual data rooms to maintain confidentiality and privacy during their services. Clients trust consultants with their confidential data, and data rooms help protect that data from any sort of threats.
4. Secure file sharing
A digital data room makes data sharing easy and secure. Project management teams, professionals, employees, etc., share business data such as files, documents, presentations, audio, and videos through virtual data rooms.
5. Board communications
Data rooms are immensely used as secure communication channels, especially during business deals. Data room management can add and remove members in VDR temporarily. Virtual data rooms have built-in communication tools like private messaging, videoconferencing, group discussions, Q&A tools, etc.
6. Strategic partnerships
Businesses can use virtual data rooms for file sharing and secure communication during strategic partnerships and joint ventures. Data rooms give you complete control over your business files, and you get to choose who can access your data and to what extent.
Fundraising is one of the riskiest business operations because a firm or corporation invites investors and presents its highly confidential data (which can be misused) to them. Data rooms make sure that fundraisers can protect their trade secrets and important business files during such transactions.
8. Initial public offerings (IPO)
Companies going public for fundraising are legally obligated to make all their necessary documents public. Data room software helps present data in a secure and organized form, and companies can answer investors’ queries in live Q&A sessions or through direct messaging.
9. Secure communication and collaboration
Remote project teams, freelancers, independent workers, and professionals use virtual data rooms to collaborate remotely and ensure maximum communication to boost their productivity.
What are the benefits of using virtual data rooms?
Data rooms streamline data sharing and management and provide secure communication channels. Here are some tops benefits of virtual data rooms:
- Maximum data protection against internal and external threats
- Secure communication
- Centralized data storage and documents management
- Remote and easy access to business data
- Secure platforms for financial and business transactions
- Safe data sharing with multiple parties simultaneously
- Complete control over data access and sharing
- Reduction in administrative expenses
Virtual data room pricing models
Data room vendors charge differently for their services. Here are some common data room pricing models:
- Per-user pricing
- Per-page pricing
- Fixed monthly/yearly charges
- Storage-based pricing
Top 5 virtual data room providers in 2022
- Merrill Data site
As you can see, virtual data rooms are safe, remotely accessible data repositories and virtual workspaces used by businesses and professionals from different industries. Data rooms are useful in consultancy services, fundraising, IPOs, mergers, acquisitions, board communications, joint ventures, and strategic partnerships. They are easy to use, cost-effective, and highly reliable platforms.