Mergers and acquisitions necessarily require interested parties to exchange confidential documents, and there have been many problems with this in the past. They included high time and money costs, risks associated with data leakage, and communication problems. Now, virtual data rooms provide companies with a solution to all of these problems because of their unique functionality and flexibility. In this article, we’ll explain why you should store your data in a VDR during an M&A.
What is an M&A data room?
Virtual data rooms are unique cloud-based programs that provide a fully secure space to store your sensitive documents and share them securely with other stakeholders during an M&A or any other transaction. Originally, VDRs were only tools for M&A deals, but now they can also be used during fundraisers, start-ups, or real estate. But using VDRs for M&A and due diligence is still one of the most popular ways to use them.
Companies appreciate data room services because they have long established themselves as a reliable tool with the bank or military-level protection. Also, VDRs can save you costs, and significantly speed up the transaction process, compared to physical data rooms.
Virtual data rooms vs. physical data rooms
It used to be that the place where confidential documents were stored was called a physical data room. Representatives from companies that the organization was planning to do deals with would go there and begin examining documents, which could drag on for a very long time. Not only did it take time and money to get there, but it also had time restrictions, document retrieval issues, and other disadvantages.
That’s why a virtual data room or how it is called in Italian data room virtuale, is much more economical and convenient. Now, mergers and acquisitions are continuously growing, and the demand for the use of VDRs is also increasing. All because virtual data rooms offer flexible remote access to information, easy search, and a reliable level of security.
Key Benefits of VDRs During M&A
Below we’ll break down why today’s business owners prefer a virtual data room over a physical one, and what benefits it provides during an M&A transaction:
- High level of security
VDR administrators have complete control over the situation inside the space. They can monitor the actions of any user as well as control document access permissions. So, as an administrator, you can allocate which of the invited users can view which documents and at what level he can interact with them (for example, you can prohibit printing, copying, forwarding, or downloading the document). VDR also features data encryption and double authentication to avoid data leakage.
- Reasonable maintenance costs
Of course, high-quality VDR services are not cheap, but it is still cheaper than renting a whole building, hiring employees, and paying for consumables in a physical data room.
- Easy access
VDRs provide a flexible platform that allows you to access information inside the space wherever and whenever you want. You can use any device and OS to explore the materials you need, and you can do it even on the road. This capability facilitates faster transaction progression.
- Enhanced collaboration
With collaboration tools, you can communicate with a third party even remotely in absolute security. VDR does this with encrypted chat rooms, or a Q&A section where you can ask your question and others can answer it instantly.