A virtual data room (VDR) is secure platform on which important documents can be saved for the duration of an M&A transaction. These documents could include employee information, contracts and financial statements. This helps to expedite the due diligence process for the buyer while also helping protect the confidentiality of the selling company’s information.
Due diligence is the research done by a prospective buyer or investor to determine the value of the potential company and its assets prior to engaging in an agreement. The process has changed dramatically in recent years due to technology advances particularly when it is sharing confidential information. Rather than having a physical space full of filing cabinets that can be opened and closed by different people online, VDRs are now accessible online. VDRs are the newest method for companies to share documents with investors and other stakeholders.
Many online VDRs adhere to strict security protocols. They are equipped with a variety of complex layers that work together to create a wall against any potential threats. Physical security includes regular backups, data siloing in private cloud servers, multi-factor authentication and redemption for accidents. Application security includes encryption methods, digital waterstamping audit trails, as well as permissions that allow for a customized folder structure.
Another feature that separates a VDR from the competition is its ability to be integrated into existing processes and systems. This allows users to use their preferred tools and applications to complete the task while streamlining the process of M&A transactions. Additionally, certain VDR providers offer more cost effective plans that are determined by the amount uploaded to the platform, number of users, storage size and the length of the project, which helps companies avoid unanticipated fees and overages.
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