A virtual data room is a digital repository for storing and disseminating documents that can be organized, shared and tracked under the control of the administrator and discretion. This makes it ideal for supporting complicated business processes and projects that require disclosure of confidential documentation to third parties outside the firewall.
The most frequent use for online data rooms is in M&A transactions to facilitate the extensive due diligence process that buyers normally take on. All relevant documentation being in one place allows for quicker and more efficient review and assists in ensuring confidentiality.
Investment banks are among the top users of VDRs. They are used by both the buy-side as well as sell-side of financial transactions like mergers and acquisitions. They often need to access and review large numbers of sensitive data, requiring secure storage and easy collaboration between multiple stakeholders across different locations and time zones.
Life science companies operate in highly regulated environments, with multiple partners and shareholders. They also have to share sensitive documentation on a regular basis. They frequently need to raise money or prepare for an IPO. VDRs offer a secure environment for collaboration and sharing with a detailed activity tracker for users to track who has accessed what files.
The top data room providers offer a variety of features that make document management easier and facilitate collaboration. These include a simple user interface, a simple multi-project management with the ability to customize permissions for each user, and a 24/7 support team. They also offer flexible pricing options, with some offering an annual subscription that provides a lower cost per project and the flexibility to stop and restart projects at will.