A virtual data room (VDR) is an online repository that is secure to store documents and facilitate collaboration among multiple parties. It is an instrument for business transactions requiring secure document management and storage such as M&As, fundraising, and due diligence.
VDRs come with a variety of features that distinguish them from other file-sharing services, including physical data rooms. For example, some established VDR partners offer security certifications (like ISO 27001 and SOC 1/2/3) and watermarking options. customizable NDAs, at-a glance reporting and other tools that enable high-level analysis and visualization of data.
The content of a VDR is customized to specific audiences. For example life science startups may include documents aimed at potential investors that provide information about their accomplishments (e.g. clinical trial results as well as HIPAA compliance) while maintaining the highest standards of data security (e.g. the company’s intellectual property and licensing agreements).
For real estate transactions, VDRs can help disclose a wide variety of documentation including the title to the land as well as investment records and management documents. They can also be used to share an in-depth, transparent view of the history of the business and future plans. It’s a useful tool when it comes to closing the deal. Making use of a VDR in the right way can reduce the amount of paper work involved and boost the effectiveness of the M&A process. For instance it is a good idea to sketch out a blueprint of the VDR structure prior to starting work. This ensures a consistent organization of folders and documents and facilitates easy navigation.