noSQL DatabaseThe virtual data room, or VDR for short, first arose out of need for a secure way to store data online. Yes, it was possible to lock the door of a physical data room where hard copy files were securely stored. But how could the same level of security be achieved for online files? And so the virtual data room was born.

TheĀ very first virtual data roomĀ was used to secure debt underwriting documents. Today, virtual data rooms are used by every industry imaginable. In this article, learn about the key benefits of virtual data rooms.

Key Benefit 1:Ā A VDR allows for secure sharing and storage of data.

It allows access to a short list of approved entrants while keeping others out. High level projects that require access to and review of sensitive information, including mergers and acquisitions, due diligence, clinical trials in the medical field, capital funding and similar others all rely on virtual data rooms for data storage and retrieval.

Within the confines of a virtual data room, collaborators can meet, share information, work on projects, review information and conduct due diligence in a secure setting. All the while, the VDR is continually creating archives of data activity, logging entry and exit times, keeping records of who has accessed the data and for how long and more. And since different privilege levels are easily set and entry privileges can be revoked at any point, access is much more secure than for other types of file sharing and collaboration systems.

Key Benefit 2:Ā A VDR facilitates time-sensitive projects and decision-making.
A data room can be simultaneously accessible to remote usersĀ from around the globe. So geographic distance is no longer a barrier to reviewing, editing or creating sensitive and timely documents.

As well, time zones are no longer a barrier, since a VDR is accessible to approved users 24 hours a day, 7 days a week.

Key Benefit 3:Ā A VDR facilitates due diligence.
Due diligence, the steps taken to comply with legal requirements prior to selling or buying any item, is greatly facilitated through the presence of a virtual data room. Because the virtual data room system is designed to document every tiny addition, deletion, edit or change in meticulous detail, an automatic log is created that can be used as proof of compliance with the due diligence legal process.

The newfound popularity of the due diligence data room showcases just how useful and essential the virtual data room has become for fulfilling these legal requirements.

Key Benefit 4:Ā A VDR can conserve financial resources.
From the moment the first threw open its “doors,” companies began to save money. Overhead costs associated with physical file rooms, on-site security monitoring, paper file folders and files and copying and stapling and printing and powering office machinery – all of these costs are notably absent from the virtual data room.

Office staff are no longer required to file, audit and edit hard copy files. Lawyers are no longer required to copy and mail reams of documentation as part of the due diligence and legal review processes. Best of all, trees are saved by the thousands as the file storage system has become paperless and moved online.

Key Benefit 5:Ā A VDR facilitates transparency and full disclosure.
For mergers and acquisitions in particular, there is a great deal involved to ensure what is being bought or sold is clearly understood and fairly valued. The use of a data ensures all participates will be able to receive instant updates when new files are added and can be automatically prompted to review files that have not yet been opened.

For buyers, this can make it easier to fill in informational gaps. For sellers, this can make it easier to identify potential pros/cons early in the process and gauge interest from one buyer to the next, as well as ensure that all prospective buyers get equal access to all of the same data sets.

Since first being introduced, virtual data rooms have steadily increased their influence over the last decade. Today, they are a virtually indispensable part of the due diligence process, facilitating deals across oceans and continents and faithfully logging every step taken along the way.

Whether a virtual data room is used as a standalone tool or in conjunction with a PDR (physical data room), VDRs expand any company’s ability to share data with a number of prospects simultaneously and expedite time-sensitive deals for everyone’s best interests. Whether the virtual data room eventually replaces physical data storage altogether or not, it is clearly a valuable tool that is here to stay.