Why do people choose data room software for business transactions?
Here are some statistics on why data room software plays such a significant role in dealmaking:
- 40% less time spent conducting due diligence
- 99.9% guaranteed data security
- 80% more time-efficient than a traditional data room
- up to 85% cost reduction
- 50 times faster document review with the implementation of AI
- up to 90% of due diligence can be managed within a virtual data room
What to consider when choosing a data room provider?
When comparing Virtual Data Room providers, reference a set of criteria to narrow down your search. Here are key distinctions between data room providers you’d want to evaluate:
Presence on the market
If a vendor is a newbie, the lack of knowledge can negatively impact any stable and prosperous organization.
Experience
The best Virtual Data Room will always have a solid track record. Focus on finding the establishment date and see if there’s any proof of the company’s ongoing evolution. Decades in service don’t mean much if the data room provider has stayed the same since the launch.
Price vs. quality
It is necessary to check the availability of certain functions for a set fee. What is in one vendor’s price may be available at an additional cost turning to another one. Data room providers will significantly vary in price based on the clients they cater to and the services they provide. Although it might seem logical to go for the lowest price, don’t decide on the number alone. Instead:
- Ensure the deal room software provider offers a convenient fees model.
- Evaluate your project’s needs, size, and specifics.
- Look out for any hidden charges or unclear costs.
Expertise
It’s always a good idea to go for a digital data room that assisted similar projects or businesses. Depending on the industry and the operations’ details, you can expect a certain set of functions from the online dataroom. The history of working in the same segment is great proof in this case.
Deployment
Another excellent indicator of the value of data room service providers is technological adaptability. Developing an effective tool and adjusting it to fit different platforms is always a sign of skill and customer prioritization.
Technical support
Another difference that can play a sick joke is the unavailability of technical support at any moment. The protection of privacy directly affects the security of storage.
Feedback
Also, take a moment to compare virtual data rooms according to independent user reviews. The best way to evaluate Virtual Data Room reviews is to disregard the ratings and read into each comment’s details.
To improve the Virtual Data Room comparison even further, put together a list of requirements specific to your task. For instance, if you are looking for a Virtual Data Room for due diligence, you will try and filter out the Virtual Data Room vendors who don’t specialize in that area. Or you could also check if the VDR provider you have your eye on offers support in your language.
Checklist for choosing a reliable VDR provider
- The provider has been on the market for a long time.
- The provider has less than 10% of negative user feedback.
- The provider knows how to work with both small companies-of-one along with global brands with a large number of employees.
- The provider has an SLA.
- The provider guarantees a particular response time to the customer support team.
- The provider has clients from your industry.
- The provider’s technical solution meets the needs of your business (95% or higher).
- Regardless of the client’s attitude towards cybersecurity, the provider focuses on protecting data.
- The provider constantly introduces innovations to make the user experience within the VDR faster, more convenient, and easier.
The most important criteria for choosing a VDR provider is a “crash test.” It’s the examination of data room services during the trial period. To be sure that the chosen provider will suit your company’s needs, you should test its work in every way possible. Anything from “dumb” questions to the “this feature doesn’t work properly” scenario goes.
But, before proceeding to a trial, your team must prepare and choose a provider. To make it easier for you, we have arranged a small guide on how to select a virtual data room and its provider among dozens of virtual data rooms.
Top 10 reasons why businesses use virtual data rooms
- Secure sensitive information sharing and storing
- Company’s digital data protection
- Full user management control
- Access to multiple projects at the same time
- Secure remote access to business documents
- Easy search for required data
- Cost reduction due to a paperless office
- Instant interaction with partners and colleagues anywhere in the world
- Automatic data analytics
- Time saved during bulk document uploads
What are virtual data rooms used for?
Virtual deal rooms meet the requirements of many industries and projects. But several use cases fully depend on data room providers.
- M&A. Virtual data rooms for Mergers and Acquisitions take up a large portion of the market. The best data room providers for M&A enable users to significantly streamline the due diligence process by simplifying and securing large-volume document sharing.
- Due Diligence. An online data room is generally the most optimal solution for intricate due diligence procedures. That’s why many secure data room services offer templates and checklists to their users.
- Real Estate. Similar to M&A data room providers, virtual data rooms that cater to Real Estate know just how complex and multi-layered their customers’ needs are. Templates and versatile file compatibilities usually come in handy in such cases.
- IPO. Filing an IPO is yet another multiple-stage process that sometimes requires the expertise of third-party experts. Virtual data room software allows users to organize the process in the most straightforward way and avoid data confidentiality concerns.
- Corporate storage. Switching from a physical filing system to a Virtual Data Room can visibly cut down costs, support the company’s green initiative, and increase document safe-keeping.
- Fundraising. Raising funds typically translates into sharing data with an unlimited number of potential investors. Virtual data rooms enhance this process by allowing admins to closely monitor any activity, regulate access, and restrict unwanted downloads and sharing.
- Banking. Banks handle a lot of personal data that can be subjected to identity theft and other criminal activities. Utmost security and confidentiality that come with data rooms are irreplaceable in banking and other financial transactions.
- Corporate Development. Arranging all the necessary information in a secure data room allows businesses to oversee the big picture, pick up on trends and weaknesses, and develop suitable developmental strategies.
- Startups. One of the key data room features for startups is monitoring each visitor’s engagement. By evaluating the time spent on every item, virtual dataroom administrators can improve the data flow and structure to stimulate the interest of other potential investors.
What functionality should a data room have?
It is important to understand every data room’s mechanics to be able to choose the most suitable one among available virtual data room solutions. Below are some of the key features found in the best virtual data rooms:
Document security. The best data rooms will implement several levels of security, including:
- Dynamic watermarking
- Fence view
- Remote shredding
- Adjustable document
- Download and screenshot restrictions
- Encryption
Access security. A secure Virtual Data Room will also allow you to adjust access privileges for every member. You will be able to establish a priority level framework, limit access to any item inside the data room, and regulate access from specific devices and locations.
- Access control and expiration
- Time and IP access restriction
- Granular user permissions
- Two-factor authentication
VDR security compliance. Reliable electronic data room providers are usually open about their certifications and compliances. The security benchmarks you want to look for are:
- ISO 27001
- SOC 2
- SSAE 16 (particularly for M&A)
Document management. The virtual deal rooms are the most effective when managing documents is seamless. You will want to see features such as:
- Drag-n-drop upload
- Bulk uploading and downloading
- Diverse format compatibility
- Automatic indexing
- Full-text search.
Ease of use. You don’t necessarily need to have years of experience dealing with Virtual Data Room service providers to judge the ease of use. A data room software is likely to be user-friendly if:
- You don’t need plugins to run it
- The services are available in multiple languages
- There’s an option of a single sign-on
- There are apps for iOS and Android
- You can quickly swipe and scroll between different items in the data room
User management. Regardless of the size of your project, you will need to manage and supervise all users for security reasons. Virtual data rooms will offer handy tools for:
- Bulk invitations
- Group access regulation
- Notifications
- Detailed user permissions
- Viewing permissions
Customer support. Another important criterion for comparing online data room providers is the support team. More specifically, you are going to look at their availability, response times, and communication channels, and these features:
- Live chat
- Personal manager
- 24/7
- Phone & mail
- Call center
Speed & Availability. You can judge the performance of any given Virtual Data Room by the following:
- Speed of uploads and downloads
- Uptime percentage
- Minimal number of maintenance windows
Customization. Making the data room look and feel like a part of your company can be a great asset. Some of the VDR customization features include:
- Adding brand colors and logos
- Enabling automatic translation
- Custom watermarks
Q&A. Data rooms often play the role of virtual meeting spaces. That’s why established Virtual Data Room providers include instruments for interactive information gathering and analytics. For example, a complete Q&A toolset will feature:
- An FAQ section
- Live discussions
- The option to restrict access to specific threads
- An ability to assign experts
- A Q&A report generator
Compare virtual data room services
| Virtual Data Room | Rating | Deployment | Best for |
|---|---|---|---|
|
M&A, Due Diligence, Real Estate Management, Fundrising, Investment banking. Small, Medium and Large businesses. |
||
|
Large corporations, long-term projects. M&A, Due Diligence, litigation. |
||
|
Used as a corporate repository, software for managing boards of directors, document flow within the company. This is a good solution for large businesses and long-term projects. |
||
|
M&A solution for businesses in any industry. Suitable for short and long term projects. Due diligence. |
||
|
Safe exchange of corporate data, short-term and long-term transactions. It is used in the financial sector, real estate management, for small and medium-sized businesses. |
||
|
Beneficial to use for managing large corporation transactions: M&A, fundraising, due diligence. Also for government agencies and global companies. |
||
|
For the organization of work and communication with employees and clients, data exchange. Used in tourism, real estate, information technology. |
||
|
Mergers and acquisitions, due diligence and contracting. Suitable for use in the international market for medium and large businesses. |
||
|
For small, medium and large businesses. Used for the secure exchange of files and documents within the company and with third parties. |
||
|
Organize and exchange confidential documents during Due Diligence and Dealmaking for medium and large businesses. Used in litigation, life sciences, investor communications. |
||
|
M&A, Due Diligence, Real estate management, Fundraising, Investment banking services. Clients of all sizes, including startups and corporations. |
||
|
For short and long term transactions for clients from 3 people to large companies. Safe exchange of confidential data in the cloud. |
||
|
Used as a digital workspace for secure, enterprise-grade file sharing. Best suited for large corporations, businesses, long-term transactions. |
||
|
The best solution for personal use, file sharing. It is used for organizing document flow within individual departments.The best solution for personal use, file sharing. It is used for organizing document flow within individual departments. |
||
|
The best solution for the German M&A market. Complies with European safety standards. |
||
|
Solution for the Australian and European M&A market. Suitable for small and medium business clients for short and long term deals. |
||
|
Share confidential documents with investors, consultants, business partners on the Polish market. Used for mergers and acquisitions, due diligence, business transaction management. |
||
|
For the secure exchange of files and data within the company and with third parties. Suitable for clients of any size and personal use. |
||
|
For secure file sharing, for short-term financial transactions, due diligence. Chosen by managers of small and medium businesses, for short-term use. |
||
|
M&A, IPO, fundraising transaction for clients of any business size, including large corporations. Suitable for international transactions. |
||
|
Deal management and project collaborations for small, medium, and large business clients. For short and long-term deals online. |
||
|
For M&A Deals, Board Meetings, Legal Proceedings. Digital rights management (DRM) software for videos, PDF, Office and OpenOffice files, TXT files, and images. |
||
|
For mergers and acquisitions, real estate management, asset lifecycle management, IPOs and capital raising operations. For clients of all business sizes. |
||
|
Software for M&A transactions in the European market. The best solution for organizing transactions on the German market. |
||
|
Trusted data room solution for clients from financial institutions, investment funds. The best solution for large banks. |
||
|
For short-term transactions of small and medium business clients. Used by startups for fundraising and initial public offering. |
||
|
Software solution for conducting business processes mineral owners and mineral managers. |
||
|
Cloud file transfer and collaboration apps for German market managers. For team communication, tasks of joint work on projects, exchange of business data with external partners. |
||
|
For lifecycle management of contracts, mergers and acquisitions, loan syndication, private equity transactions. Used by small and medium-sized companies in various industries. |
||
|
For managing legal processes, law firms, corporate legal contract management. |
||
|
IdrShare’s owners have now launched a new software, Mineral Box to help mineral royalty owners manage mineral ownership data. |
||
|
Used by small business owners for short business transactions in the German market. |
||
|
For Italian business owners. Used for digital workplaces, due diligence, board of directors, stock exchange listing, NPL, arbitration, internal audit, fundraising, real estate. |
Frequently Asked Questions
Virtual data room (VDR) or Deal Room is electronic storage that differs from other programs in additional functions and grades of safety. The platform overshadowed traditional storage. It took a little time because a vdr offered businesses previously unknown tools. Administrators have a lot of tools to manage access. Users receive permissions to work with certain data and for specific actions. In any case, managers can restrict access for each guest or authorized person. Up to this point, no programs have managed to break the integrity of this tool.
A virtual data room is a secure virtual space that serves multiple essential functions:
- Confidential data storage and sharing
- Communication and collaboration with people inside and outside the company
- Digitalization of the company’s workflow and dealmaking
The decision to purchase data room software is not usually specific to a position. Depending on the company’s size and segment, virtual data room obtaining and administration might be the responsibility of anyone from an office manager to the CEO.
The best virtual data rooms will guarantee 99.9% security. One way to confirm such statements is to check the data room provider’s standard certificates, such as ISO 27001, SOC 2, or SSAE 16.
A traditional data room is a physical space that contains large amounts of data. Typically, traditional data rooms have access restrictions and intensified security.
The main advantage of a virtual deal room over public-access cloud storage is security measures. A data room will implement more strict protective protocols and monitor every user’s activity in detail. Plus, virtual data room providers often provide additional tools for making the user’s VDR experience more effective and convenient.
Data room providers often use cloud technology to store users’ data, a data room is not the same as a public access cloud storage platform. The critical difference is the security measures featured in virtual data room software. For example:
- Multiple-step verification
- IP-based access restrictions
- Dynamic watermarking and fence view of the documents
- Adjustable restrictions on retrieving and sharing the data
- Various levels of access privileges
Data room software operates as an extranet that can be accessed via the Internet. Essentially, virtual deal rooms are highly secure storage spaces with an option to modify data, communicate, and enhance the workflow from anywhere in the world.
Depending on your task, you can request a checklist of the items to include in the data room from the VDR provider. For example, virtual data rooms for Mergers and Acquisitions will need to feature sections like employee information, intellectual property documents, director board materials, financials, major contracts, and others.
In case you have never used a virtual data room, the best data room providers will always have a training program in place. Depending on your company’s size and the overall technological literacy of all the VDR users, it might take anywhere from 15 minutes to a few hours to fully comprehend how to use the data room in your case.