A virtual data room (VDR) is secure platform on which important documents can be saved throughout the duration of an M&A transaction. These documents may include employee information, contracts and financial statements. This helps to expedite the due diligence process for the buyer and also helps to ensure the privacy of the information of the selling company.

Due diligence is the process of research done by a prospective buyer or investor to determine the value of the potential company and its assets prior to engaging in the process of negotiating. Technology has altered this process dramatically over the years, particularly in relation to sharing sensitive information. Rather than having a physical space filled with filing cabinets that can be closed and opened by different people, on the internet, VDRs are the newest method for companies to share their files with investors and other stakeholders.

Many online VDRs adhere to strict security protocols. They have many complicated layers that work together to create a wall against any potential threats. Physical security includes continuous backups and data silos in private cloud servers, multi-factor authentication and accidental redemption. Security for applications includes encryption techniques, digital watermarking audit trails, as well as permissions to allow for customized folder structure.

Another key feature that distinguishes a VDR from other competitors is its ability to integrate into existing processes and systems. This lets users use their favorite tools and software to accomplish the task at hand to reduce errors and speed up the process of M&A transactions. In addition, some VDR providers offer more efficient plans based on how much is uploaded to the platform, the number of users, size and duration online data room of project, which helps companies avoid unexpected costs and overages.