A virtual data room (VDR) is a secure, cloud-based system that allows businesses to store and share documents online. Most VDRs come with advanced encryption techniques and access control systems, creating an electronic fortress to safeguard sensitive information from being accessed by unauthorized persons. This is why VDRs can aid in streamlining processes, speed up transactions and improve communication.

VDRs are commonly used in mergers and acquisitions in which parties exchange large amounts of documents in due diligence prior to making a major deal. VDRs can make M&A more efficient and less expensive by removing the need to deliver documents or travel to meetings.

VDRs are also useful in strategic partnerships, where parties work together to create new products or expand an existing business. It can be difficult for partners to access data without divulging sensitive information or causing an unintentional violation of compliance.

Security is the primary aspect to consider when selecting a VDR, whether it’s to be used for due diligence, M&A or internal collaboration. Modern VDRs are equipped with multi-factor authentication, advanced encryption both in transit and at rest, audit logs and other security measures to mitigate the risk. They also provide features such as watermarking, disabled printing and blind click view to protect the confidentiality of confidential documents. This ensures that only authorized users are able to access the document, and demonstrates a commitment to integrity of data. The top VDRs also provide analysis of file activity and user activity that can be accessed by administrators for accountability.