What Is a Virtual Data Room?


A virtual data room is a tool that provides secure, centralized storage for digital documents. It lets users share information with internal and external stakeholders. It also allows document version tracking as well as enhanced security.

Investment bankers use VDRs to conduct due diligence in M&A transactions, which generally require large amounts of confidential documentation to be reviewed by multiple parties. For a deal to be concluded, they must be able to upload and examine these confidential documents quickly. They also require an efficient storage space to store this sensitive data. A purpose-built VDR makes this easy for to manage thanks to a clear folder structure and powerful controls for access to documents that can be instantly revoked in the event of a transaction failing to proceed.

VDRs can also be useful tools for regulatory filings and audits that require transparency with internal stakeholders as well as external regulators. These projects typically require lengthy collaborations among teams working in different locations and time zones. A specially designed VDR helps to collaborate, track activity and communicate with the stakeholders on a project by project basis without the necessity of meetings or emails.

When deciding on a service provider to work with, look for features like drag-anddrop as well as bulk uploads of files and support for the most popular extensions. It is also important to know the level of physical security the company offers with offsite backups, redundancy, and fire protection. You should also determine if they provide the ability to apply dynamic watermarks on printed and viewed documents, or set access restrictions for specific IP addresses.