A virtual data room is a device that provides secure, central storage for digital documents. This allows users to share information with internal and external stakeholders. Document version tracking and enhanced security are also possible.
Investment bankers use VDRs to conduct due diligence in M&A transactions, which typically require large quantities of confidential documents that are reviewed by multiple parties. They must be able to quickly upload and review these documents in preparation for closing a deal, and they require a reliable storage space for this sensitive data. A VDR with an organized folder structure and robust controls for access to documents that can be immediately removed in the event that the deal fails, makes it easy for them to do so.
VDRs are also valuable tools for regulatory filings and audits that require transparency with internal stakeholders and external regulators. These projects typically require long collaborations among teams that operate in different time zones and locations. A purpose-built VDR allows you to collaborate, monitor activity and communicate with the stakeholders on a project by project basis without the need for emails or meetings.
When choosing a provider, look for features like drag-and-drop capabilities as well as bulk uploads of files and support for popular extensions of files. You should know the level of physical protection the company offers, including offsite backups and redundancy. It is also important to determine if they provide the ability to apply dynamic watermarks on printed and viewed documents, or set access restrictions for specific IP addresses.