A virtual data room (VDR) is an encrypted repository for sharing documents and information. It is an essential tool used in M&A transactions due diligence, fundraising, and other high-risk business activities that require the exchange of confidential information among different parties.
In the past, physical data rooms were used to store data. They were locked in a central area that was monitored and required security personnel to keep track of access. These rooms are costly to maintain and do not have many features which makes them a poor option for modern businesses.
Digital VDRs are a central repository that can be accessible by authorized users on demand. They also come with a variety of security features that are industry standard like encryption and two-factor verification, as well as audit logs and watermarking. This means that you can be confident that your data is protected from malicious actions.
When choosing a VDR provider, be sure to investigate their history and expertise in delivering online document management solutions to protect sensitive information. Take note of how they meet industry compliance standards. For instance, HIPAA-certified companies ensure that health information protected by HIPAA is kept safe, while those certified under GDPR and CCPA are able to help companies adhere to European privacy laws as well as California consumer protection laws.
Many tools such as Google Drive, Dropbox, and Email can be useful for daily file sharing, however they’re not the ideal option for storing and sharing sensitive information that requires a high level of privacy. Utilizing a trusted, reliable data room will help you streamline M&A transactions and due diligence processes as well as other high-risk business initiatives while keeping your sensitive information safe and organized.