The largest corporations and businesses worldwide are turning to virtual data rooms (VDRs) to conduct important deals and mergers & acquisitions (M&As). Slowly smaller businesses are also catching on and are using dataroom software to their advantage.
Virtual data rooms (VDRs) are online spaces where businesses and individuals can upload and securely store their files. VDRs allow users to share large amounts of files with investors, lawyers, and stakeholders, allowing much smoother communication and due diligence process without the need to travel around the world to close a deal.
In this article, we’ll go through the main benefits of VDRs as a solution.
Security at the forefront
No matter the size of your business, security should be at the forefront of your strategy nowadays. With more cyber-attacks and hackers trying to get into your systems, it’s as important as ever to have all your documents securely stored.
VDR software offers unmatched security options. Because it’s intended to be used for sensitive files and documents, security is not an afterthought but is ingrained in the very nature of virtual data rooms.
You can rest well knowing that all your documents are safely stored online, with no internal or external threats to your most sensitive documents.
Ease of deal making
Physical data rooms are slowly being phased out in favor of virtual data rooms.
When physical alternatives were in everyday use, companies would rent a physical room to place all the documents. Interested parties would visit the room one by one when conducting deals requiring significant volumes of paperwork and data.
Thanks to the flexibility and security of VDRs, more and more companies are choosing it over physical data rooms. Using VDR software, several investors can view the documents simultaneously without interruptions.
Furthermore, as the owner of the VDR, you can control who accesses your documents and for how long they can view them. Some software even allows you to control if the other parties can print your documents or not.
Best of all, a virtual data room makes it much easier to make even large deals, even if you and the interested parties are miles apart.
Faster processing times
Virtual data room software makes it easy for investors to browse through documents to find and analyze everything because there is no pile of paperwork to go through.
This saves investors and your employees a substantial amount of time and resources. Having every crucial document readily available makes closing agreements and processing files a far more positive experience for all parties involved.
Furthermore, any communication between your company and the interested parties can happen through the electronic data room platform, reducing the amount of miscommunication via emails and other communication tools. This also significantly speeds up the process.
Easier M&A process
The mergers and acquisitions process can be long and tiring for all involved. There are countless documents to be shared, analyzed, reviewed, and signed. It sometimes takes months to years before a deal is closed.
The process was even longer when different investors worldwide had to travel to one place to get into the physical data room to review the necessary documents. Operating a physical data room, especially when dealing with international investors, is a logistical nightmare for the host company. From travels to boarding, everything has to be tightly controlled under schedule.
Virtual data rooms eliminate such needs, making it easy for people from across the globe to access the documents.
Saved money
All the costs related to physical data rooms, including the rent, traveling, and much more, are eliminated when conducting business through VDRs.
Depending on the provider and plan you choose, the prices for electronic data rooms can vary. They differ based on the amount of storage you need, functionalities you choose, and much more. However, even when choosing the most expensive options for a virtual data room, the price doesn’t come close to the expenses associated with physical rooms.
Additionally, you are not only saving financial resources but time as well. Because of the ease of setting up and operating a VDR, you can divert your and your employee’s energy elsewhere, potentially saving money that way as well.
Preserving documents
Because of the high security that virtual data rooms provide, companies can keep the documents in the digital space for as long as they need them. When making business deals, it’s important to track who views the specific documents for how long and make sure that everything is accessible for investors to analyze.
Compared to physical data rooms, documents stored in a VDR are not prone to natural causes that might affect your sensitive information, such as fires or other disasters, as well as slow disintegration of paper.
Choosing the right virtual data room provider
While the advantages that virtual data rooms provide are apparent, sometimes companies find it hard to find a reliable, safe provider that suits their needs.
When conducting a data room comparison, you should consider the size of your business, the amount of data you need to store and process, and additional features that you might need.
- Business size. Virtual data room providers all offer the same services on the surface level. However, most of them are tailored towards either large or small businesses. Depending on the size of your business, you should choose the right VDR provider that will enhance the experience of deal-making for both you and the interested parties.
- Data storage. If the number of employees you have is small, you won’t need too many people accessing the VDR on your end. The amount of data you will be using a VDR for will largely determine the price.
- Feature set. Some additional features are also available for which you will be charged extra, so when researching VDR providers, you should be aware of all the potential expenses.
We hope that you no longer have any doubts about the benefits of virtual data rooms. As a next step, check out the criteria mentioned above and make the right choice of a solution for your business!