Partner Article

Virtual Data Rooms For Business Purposes

When performing high-stake business transactions, due diligence is paramount and a key pillar of getting the transaction right. This is especially the case with regards to mergers and acquisitions regardless of the company size involved.

Here is where data rooms come in. They provide a safe and secure means of and platform for exchanging company/corporate data, information, and secrets. Therefore, they facilitate such business transactions.

Data rooms can either be physical data rooms (secure rooms that provide a central area for scrutinizing of corporate documents between companies) or a virtual data room, popularly known as VDRs. VDRs are an IT-based online platform that functions as a physical data room. When compared, VDRs provide solutions to the problems physical data rooms faced over the years. For instance, they get rid of the risk of classical burglary. Thus VDRs are inherently secure.

To further the security of the platform, most VDRs provide their platform with a minimum of 2-step verification protocol. Therefore, even in instances where a device used to access the VDR (such as laptops, smartphones, and tablets) is stolen, thieves cannot gain access to the critical information. The multifactor authentication usually consists of using passwords as well as entering a randomly generated code that is sent to another device.

However, the security protocols do not end there as the information on the platform is usually encrypted. The base level of encryption is the 256-bit SSL Encryption, which guarantees the security of the information on the platform. Check out these virtual data room reviews.

Nonetheless, it is important to understand the benefits of such as system. In this regard, the analyzing the benefits of this platform should be done on the basis of a seller or buyer point of view.

Advantages Of VDRs For Buyers

- Reduces costs (negates travel costs, hotel accommodating and in-person meeting);

- Saves time (since there is no traveling, these platform help to save time);

- Improves transparency among the parties involved.

Advantages Of VDRs For Sellers

- Time saving;

- Cost saving;

- Increased transparency;

- Higher security;

- Improved legal compliance;

- Increased competition thus leading to competitive pricing.

However, just as it with any other cloud-based platform, there are inherent disadvantages to using the VDRs. One apparent disadvantage is the immaturity of the system. This is to mean that VDRs are constantly evolving to new platforms as new features are being added every so often. The majority of the envisioned VDR features are yet to be implemented in among the VDRs. However, the biggest disadvantage is the low popularity of the platforms, and thus fewer seller and buyer willing to using the system. If the seller of or buyer in a transaction is not willing to use the system, the platform does not work efficiently.

This was posted in Bdaily's Members' News section by Cormac Reynolds .