Virtual data room or VDR allows parties to share critical business documents that are relevant to a specific setting. These activities are conducted on a secure cloud-based platform. Sensitive documents are stored in electronic format on secure servers. The platforms are ideal for facilitating the due diligence process in various transactions, including M&A, loan syndication, private equity and more.
Previously, VDRs were only used by legal teams to review sensitive information with clients. The platforms have since gained popularity in various sectors thanks to their cost effectiveness, efficiency and enterprise-grade security.
However, selecting the right data room provider requires careful comparison of various aspects, including security, service provider reputation, range of features and pricing. The market is filled with new and established providers from which to choose. The ideal choice provides a practical way to accelerate the due diligence process.
Some of the key VDR service aspects to consider when choosing a provider include:
Customer support plays a vital role in ensuring that all queries are dealt with quickly. This is particularly important when faced with technical problems. The provider should be reachable round-the-clock and the help desk must be manned by friendly, knowledgeable staff. Prompt assistance can make a difference between favorable or unfavorable outcomes of business transactions. Poor customer service has the potential to impede the due diligence process.
Some service providers offer dedicated project management support. This means customers enjoy access to their own dedicated project manager, who is on call.
A good VDR provider can replicate data in mirror sites and within the same data center. The mirror sites should be located in multiple geographical areas.
Document security is a non-negotiable requirement that must be hardened to prevent hackers from accessing sensitive information. Reputable VDR providers rely on robust security features, such as encryption and two-factor authentication. In addition, they provide robust physical security features on their data centers, including biometric access, 24-hour remote surveillance, security guards and advanced fire detection systems.
Some of the security features that come standard across different VDR service providers include watermarking, disabled printing, permissions-based roles and virus scanning. A highly secure platform goes beyond these basic measures to provide enterprise-grade protection.
Data rooms should provide companies round-the-clock access. This can help accelerate the due diligence process. Some providers still apply access time restrictions, which compromises flexibility since it is common for parties involved in the deal to access the information from different geographical locations or time zones.
The overall cost of the VDR service is a key factor that can separate providers offering a similar range of features. It is important to establish all the features included in the package to make an informed decision. Some providers vary costs depending on the level of technical support required. The same applies to weekend access.
Ease of use
User experience is a crucial aspect that must not be taken for granted. The data room’s interface should be easy to use. This eliminates the need to train staff and parties involved in the deal. In addition, a simple, intuitive interface does not impede the due diligence process, which typically moves fast.
The platform will be accessed by various parties on different types of devices. Hence, the data room must be compatible with a wide variety of operating systems, including Windows, iOS, Mac and Android. It should provide access to these operating systems without compromising on security. The platform’s security measures must be uniformly applied across all devices.
Reporting and auditing
Organizations require the ability to track user activity in the data room. This enables administrators to report on the deal and associated bids. A good provider offers detailed audits and page-level reporting. As a result, it becomes easier to track bidder activity down to all pages accessed.