A virtual data room (VDR) is a specially designed platform for secure sharing of documents and due diligence. This is distinct from popular file-sharing applications such as Dropbox or Google Drive, which aren’t built for business use cases that require more security and compliance adherence.

M&A When a business is considering an acquisition, or needs to share sensitive information with potential buyers in some other way, VDRs are a great tool to monitor activities and grant access. For example the VDR with an active activity tracker allows administrators to know who has accessed and downloaded files, as well as the times they were accessed. This will ensure that confidential documents are not viewed by anyone else without permission. The ability to immediately revoke access is also beneficial in the event that the transaction does not conclude.

Private Equity & Venture Capital – The process of raising capital usually requires multiple rounds of sophisticated investors. An online VDR allows companies to securely share financial records and legal documents with investors, while keeping the privacy of the data.

A VDR also supports the electronic signature of contracts and other documents. This means that you don’t have to send draft documents back and forward via email or through an external eSign provider, which could introduce additional security risks. The majority of modern VDRs support the use of granular security options for folders and files. They can also use real-time labeling, classification labels, vectors, and permissions to restrict access by anyone who isn’t authorized. They can also generate reports and analytics to help admins keep track of data activity.

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