VIRTUAL DATA ROOM PROVIDERS REVIEWS

A virtual data room (VDR) is an online place for keeping and sharing confidential data. Usually, it is a cloud depository for the storage of sensitive or confidential information with an e-catalog. Organizations and entrepreneurs mostly utilize VDRs in such complex corporate processes as financial transactions, board meetings, communication with third parties, among others.

Online data rooms emerged less than twenty years ago when cloud and SaaS technologies began to develop progressively. They have come to replace offline data rooms — made redundant by business globalization and the recent online boom — which were used to deal with confidential or copyright data before.

Meanwhile, the Internet has given birth to one of the biggest issues of today — cybercrime. The statistics regarding data breaches is impressive: since 2005, the number of leaked records has grown almost ten times in the US and reached 178 million records last year. Luckily, with VDRs, businesses can benefit from staying connected globally while protecting their data.

Essentially, a deal room is not a regular file-sharing service. The market already offers various cloud-based options and document sharing services for working in groups which are convenient and suitable for everyday use. These are such popular tools as Dropbox or Google Drive giving users the opportunity to share and edit a document together.

However, unlike file-sharing services, VDRs let their users feel the value of confidentiality with integrity and availability as core principles of information security. Also, they significantly differ from file-sharing tools in functionality.

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A VDR has become a tool of choice for confidential communication in the new digital business environment. Its functional analysis allows highlighting five key advantages.

Security

Many, if not all, VDR providers track and follow all the updates regarding protocols, laws, regulations of information security globally. For example, modern VDRs comply with GDPR, HIPAA, and other personal data security standards. When using a VDR, businesses enjoy a level of data protection similar to that of established banks or even governmental institutions. From a technical standpoint, deal room providers use key card access, AES document and transfer encryption, 256-bit password encryption, multi-factor authentication, dynamic watermarks, expiration intervals, set of firewalls, and more. Such a vast range of precautions ensures the highest level of security.

Availability

In short, anyone with an experience in utilizing any popular document sharing service will have no difficulty in operating any modern VDR. A deal room is easy to use thanks to friendly and intuitive user interfaces. The latter provide all the common and practical features like drag-and-drop of files, advanced search, document versioning, undo options, etc. Moreover, no specific technical equipment or an expert are required to install and run the solution. The rooms are available and easily accessible to all the participants who need to be involved in the process or transaction.

Management 

When operating VDRs, users get full control of documents, as well as of the roles and degrees of access of everyone involved in the interaction. A VDR is a tool managed by a person commonly known as an administrator. They are responsible for labeling documents and giving permission to other users or third parties. 

Usually, modern VDRs can be easily managed and are rather flexible when it comes to tailoring to the user’s needs. For example, an administrator can set roles for individual participants or create a group with the same regulations for each member. Regarding documents, users have the discretion to add watermarks or set a file expiration time. Each document can be labelled with attributes of editing, printing, copying, or viewing.

Active monitoring and tracking are an extremely valuable control characteristic of many deal rooms. A VDR can allow administrators to track what each user is doing with a particular document at a specific point of time. It can be detected whether a file has been printed or copied. Additionally, an administrator has options to monitor users’ activities in real-time: what document they are viewing right now or how long they have been doing that. This feature is paramount for interactions with third sides.

Skeptics may say that VDRs emphasizing human-driven management have the risk of a human error. Without a doubt, human errors are among the worst enemies of any information technology. Luckily, many modern VDRs are equipped with built-in mechanisms minimizing such errors or even eliminating them completely: from API solutions to simple double-check alerts or ‘view as’ options (when the creator of the data or the room can track what any user sees and can do with the data).

Effectiveness 

By employing VDRs, businesses increase their efficiency and streamline their processes significantly. Companies obtain a safe option of dealing with all copyright information and sharing it securely as well. Besides, the implementation of VDRs is straightforward, and their management will not be a challenge. Except for these boosting factors of efficiency, VDRs are time- and cost-saving solutions.

Let us give you an example. An old-school approach to due diligence or similar procedures is usually time-consuming. To gather people in a physical location may be complicated. In addition, many specialists should be involved in collecting data (huge volumes of it, usually) that may be stored in different places while other factors can make the use of offline data rooms laborious. What’s more, physical deal rooms are costly. Businesses may need to hold meetings engaging international participants, allocate budget on business trips and collateral expenditure. To overcome these issues, VDRs give companies instant access to huge amounts of gathered and categorized materials in one catalog, which parties can evaluate beforehand — it helps to hold more organized Q&A sessions. VDRs can be a great option as, usually, people are more flexible in scheduling e-meetings, which accelerates any procedure. 

Relevance

We live in the digital era, with technology becoming critical to almost any process and is likely to cover even more areas in the nearest future. Denying technological progress is extremely detrimental to companies as it slows them down while everyone else is speeding up. It seems even more bizarre today as the COVID-19 pandemic that constrained a third of humanity to stay and work from homes making companies need any kind of tool which facilitates remote team and operations management. Thus, a VDR is just the right solution for today’s business environment.

Historically, the use of VDRs has had dozens of purposes. Below are use cases demonstrating the outstanding applicability of VDRs.

M&A due diligence 

Online data rooms are a handy tool to use in these processes. In essence, due diligence in merging and acquisition is a complex process requiring data collection, thorough research, and review of materials. All these manipulations entail the assessment of sensitive records by all the involved parties, which slows down the procedure and makes it slow. Participants actively use VDRs to avoid turning the final phase of M&A transactions into an exhaustively protracted routine as well as to ensure security. Even if a deal is not closed, it is possible to terminate the data room access.

Audit

No matter what industry companies operate in, an audit is a standard practice of business assessment. Frequently, this procedure entails the involvement of third-party professionals, which typically means that outsiders are going to have access to financial documentation, corporate records, and other confidential information. By using a virtual data room, users can prepare and share all the needed folders, while knowing that every bit of information is secured and cannot be corrupted or stolen. What’s more, the whole workflow becomes more smooth and quick as auditors receive notifications about uploads and updates instantly; they can request, comment, and clarify everything needed. 

Fundraising

Attracting and convincing investors is often a challenge. This process usually entails getting ready for many rounds of negotiations which need to be back-upped with different kinds of reports, financial statements and customer references, among hundreds of other documents. In other words, fundraisers will need to collect and streamline all the valuable and classified records that may positively affect the outcome of negotiations. Further, they may need to find and share new files during the session. Thanks to the existence of virtual data rooms, the whole process becomes less stressful and more productive. Besides, both sides of talks enjoy a required level of process control.

Regulatory compliance

Businesses must comply with various sets of industrial laws and policies, as well as meet international regulatory compliances. This helps governmental organizations, external firms and potential or current business partners understand how a company follows the rules. Usually, such documents as regulatory reports and checklists are used to check if the company is compliant with necessary standards and rules. VDRs help swimmingly import all critical information into checklists and fill regulatory reporting forms.

Litigation

Legal firms are regularly involved in processing and sharing large amounts of confidential records. Data rooms add convenience to that process. Litigation teams and clients can establish an applicable channel of communication there. Optionally, this channel can be expanded, and external experts or other third parties can enter the litigation process. The ability to process large amounts of documents and categorize them makes a VDR a beneficial tool for law firms.

Initial Public Offering (IPO)

When an enterprise decides to go public, it means exposing itself to new regulations. It also entails sharing a lot of specific information with shareholders and institutions. This translates into many steps and rounds of discussion in which many sensitive files may be used. To facilitate this process, businesses can employ virtual data rooms.

Procurement projects

Both public and private agencies may participate in procurement projects. Procurement managers often use request for proposal (RPF) templates as well as can request specific information (RFI). In this scenario, VDRs help to keep all the project materials such as bidding instructions and procurement protocols in one place and initiate a Q&A session for managers and bidders. 

Strategic partnership

Today, such type of commercial relationships is a common phenomenon. Strategic partnerships are formalized, which implies the use of contracts and legal agreements. Before signing up documents, both sides need to be transparent regarding their corporate records by sharing all the needed data to ensure mutual trust and facilitate negotiations. In case a partnership falls short, access to the data room can be restricted immediately.

Reporting 

Reporting is a widespread and varied corporate activity. It naturally deals with statistics and other valuable increments. Among others, firms provide reports for limited partners and investors or share periodical company’s portfolios. Each of these cases requires a tailored level of transparency of confidential data. Users can gather necessary statistics for a report and set group or individual access for other VDR users without risking the exposure of confidential data. It’s possible to create a template as reports are required regularly. 

Board meetings

As remote work is gaining momentum, board meetings involving members living in different cities, states or even countries have become a common phenomenon. This calls for a safe and modern solution like VDRs that can ensure secure and fast communication through classified meetings, as well as the regular receipt of updates of corporate records.  

Intellectual property management

Intellectual property (IP) is essential for various organizations. For example, startups, research groups, and tech-offering firms, among dozens of other types of businesses, depend on their proprietary information entirely. Sadly, this information can be stolen in the process of negotiations. Hence, managing and keeping IP secured while licensing or presenting it to other parties is an indisputable must. This is a task that any modern VDR can handle. Full list of virtual data room providers.