A virtual data room (VDR) is cloud-based software that allows you to share sensitive information in a safe, controlled environment. It speeds up complex deals and ensures transaction participants have access to the documents they need to fulfill their duties. It also permits both sides of a transaction to access the same documents in order to complete due diligence. This helps to prevent confidential information from accidentally getting into the wrong hands.

VDRs are commonly utilized during M&A due diligence, fundraising, particularly biotechnology licensing and tender procedures. However, there are many other ways that a business could benefit by using the VDR to improve its business operations.

In a typical data room the files are arranged into folders in order to make them easy for users to navigate. In some cases, files are further categorized by security level, project stage or department. This can be time-consuming and must be completed manually unless the software allows intuitive ways to automate the repetitive tasks.

Another key attribute to look for in the VDR is the capability to transfer and receive files from any device, without the need to download or upload them to a different platform. This reduces IT overheads and minimizes the potential for security breaches. It is also important that a VDR provides granular access privileges as well as watermarking and audit trails to ensure that only authorised users have access to sensitive information.

It is also important that the VDR is able to integrate with other business tools such as more those that are used for due diligence, such as cloud-based storage and email. This allows teams to work more efficiently and saves them time by not having to switch between several applications.