Virtual Data Room Solutions & Use Cases

A virtual data room is an online archive that is used for data collection and the following distribution within a selected circle of users. Such an online vault provides a high level of security and makes it impossible to perform unauthorized access to the information and to all the discussions that happen inside the room. Due to the nature of the product not every man in the street will be looking for a virtual data room to keep the data. The following is a list of industries where the use of an online data room is the most common to find.

In most cases, a virtual data room is hired for the facilitation of the due diligence process in the M&A and other financial transactions. However, the use of dealing rooms extends further:

Merger and Acquisition (M&A)

M&A is a documentation heavy transaction where ownerships and equities of one company are transferred to the other one for a fixed price.
In the process of merger and acquisition transactions, the virtual data room is established as the central repository of information both companies need to have access to. The dealing room permits the parties involved in the process to view, copy, and edit the data in a controlled virtual environment where confidentiality is maintained. There are a number of professionals involved in the process: accountants, lawyers, financiers, and many more. All these people need to have access to the information one company transfers to the other one, sometimes simultaneously. Prepared in advance, a virtual data room facilitates the entire process by providing access and keeping all the data secured and under surveillance.

Learn more about Importance of Virtual Data Room for M&A

Due Diligence

Due diligence or in simple words “heavy research” is a process that is taken by any reasonable party before entering any deal. Due diligence is an investigation process that one has to compose before entering any sort of a deal especially if the deal is taking place in the field of big business. The virtual deal room makes the entire mission easier to accomplish by keeping all of the documents in one digital space while providing high-security standards. Such research is usually performed by a company that is potentially willing to acquire assets of the other company. While the entire process involves numbers of documentation to go through and people to work on this documentation, a strong virtual data room will allow to increase the speed of the process by keeping all of the sensitive materials in one basket. Moreover, an online dealing room provides its clients with the ability to interact with each other freely with no risks of getting hacked, thanks to the high-standards of implemented security systems.

Secure File Sharing

There are cases when a company needs to safely distribute confidential material with such external parties as services vendors, potential investors, etc. Having a decent online data room installed dramatically increases the speed, efficiency, and safety of any file distribution process. Owning a company means to own all the information that is somehow related to the company. There are a number of types of information: marketing, human resources records, strategies, new tech developments, blueprints, plans, presentations, and many more. It is impossible to own a company without a successful and efficient data flow within it. It is simple if the company consists of four people, but it becomes tricky if there are branches around the city or even the world.

This is where the owner of the company decides to go digitalize the process. At first, simple electronic mails, FTP servers, messengers outperform pen and paper with ease, however, an advanced business owner might be willing to have more in terms of tracking and security.

A Virtual Data Room is an online environment where users upload, store, and distribute all the sensitive data. Apart from that, a strong VDR allows its owner to install certain access levels which will grant or deny access to different information pieces to the various groups of personal.

Learn more about Secure File Sharing Services of VDR

Online Audits

There are instances when a business has to provide its confidential information to external parties for reasons that have no relation to the competition. Such parties could be but don’t limit to accountants, legal counsels, auditors, lawyers etc. In such a case, company leaders will have to solve the task of risk-free delivery of confidential information. This is yet another instance of how an online data room can simplify any data sharing objective a company may face.

An online data room allows its owner to separate all the uploaded data into different file groups and provide access to each of the groups to the different parties of professionals. There is no need for an accountant to have access to the jurisdictional part of the documentation as well as a lawyer who has nothing to do with a balance sheet.

Document Management

There are numbers of instances when a company grows to be that big that general cloud storage is not enough. It could be an information technology company that operates in the field of software engineering. The amount of data that circles through the company are enormous and all that information is confidential. VDR is an online controlled environment that was developed for secure file distribution which means that there is already a built-in module that allows managing all of the documentation stored in it as well as access to it.

Nothing solves an issue of documentation management better than virtual data room software. Having a strong VDR installed provides its owner with an ability to gather all the important data in one online environment with a 100% guarantee of its safety. A strong dealing room provides its customers with the ability to choose which personnel have access to that or another chunk of data.

IPO

Initial Public Offering is a documentation heavy step that cannot be processed without a decent virtual data room involvement. While this step is a great opportunity for an organization to increase its profits, it also is a huge responsibility to public shareholders. It means that the company has to become more transparent than it used to be and to do so the company’s accountants and lawyers have to work through all that documentation at once.

A strong virtual data room facilitates the course of data processing by keeping all the required material in one place, providing access only to those members of the team who has proven his or her knowledge in the field. Apart from that, entrusted personal is granted an ability to communicate freely within an online dealing room without any risks of being spied or robbed (information-wise).

An Initial Public Offering is one of the most onerous transactions a company might face during its existence due to the consequences this decision usually leads to. The first and foremost change a company will face is a new set of regulations and rules on the different jurisdictional levels. Apart from that, the company has to become 100% transparent for the publicity as well as for the potential shareholders. In order to survive such a challenge, a business has to have a careful document retention and management system, which only a strong VDR can provide. 

Tender

In case if a company announces that it wants to organize a tender it means that this exact company has already purchased services of a legitimate virtual data room provider. The amount of data company employees have to process among a tender is tremendous. Competition with several other companies on the Tender is yet another challenge for a business. To survive the chaos a meticulous data management is required which is easily achieved with a properly installed virtual data room.

Firstly, a project has to be prepared by the hiring company. The entire process of project preparation has to be 100% transparent for potential bidders. Secondly, there has to be an easy bidding system for the convenience of prospective executors. Moreover, all the information on the tender has to be updated and all of the tender participants have to be informed on the status of the process. And all that is just the tip of the iceberg. There is so much more work to be done in terms of documentation (legal, accounting, etc.).

A virtual data room is a perfect choice for a company that is planning to organize a tender since an online data room will provide its owner with all the required tools and organizer needs. The company employees will receive a manager status within the virtual environment of the online data room and they will control the tender flow and all of the prospective bidders will enter as guests and will be able to view all the required data for the successful bid preparation. Both parties will be able to operate within the same environment separately from each other.

On the whole, a VDR can be successfully used by the C-level personnel who need to distribute confidential information within an inner circle, human resources department who are liable for maintenance of records of all the employees a company has, project managers who are responsible for different business operation forms, and many more. The value and efficiency of a virtual data room are hard to overestimate.

Capital Raising

Raising capital means that a company is looking for additional money from investors. Investors could be banks, angel investors, venture capitalists, etc. In either way, an investor would love to have a clear understanding of the company’s documentation. Apart from the tons of documentation required, its presentation matters too. An online dealing room will provide its users with a 24/7 available online environment. All the valuable data can be conveniently allocated within this virtual environment.

The convenience of the online dealing room is enhanced by the in-built communication system that allows its members to negotiate on any sort of sensitive topic without any data leakage risk.

Litigation

Litigation or a lawsuit is a proceeding which one company initiates against another company. Usually, such a procedure is weighted by a significant amount of legal documentation. There are cases where certain data has to be provided for public access.

In such a scenario, the best option a company has is to hire a decent virtual data room provider. An online dealing room facilitates the entire process of analyzing and sharing data while providing several security layers and confidentiality.

Portfolio Company Reporting

Overseeing heavy loads of documentation like board interchanges, KPIs, accounting data, shutting fasteners and review data for each portfolio organization might be a confusing process. It’s particularly troublesome in case if a company is depending on unstructured approaches, similar to email, general data sharing service or, even worse, local storage.

To avoid all of the trouble, one should hire a strong online dealing room which will provide all the tools one may need. The virtual data room supplies its clients with the ability to upload, store, and distribute all the confidential data one may have while providing a multilevel security system that keeps track of all the actions executed within the virtual environment.

Regulatory Risk Management

Usually, regulatory risk means a risk for a business license to be withdrawn or the application of certain regulations that negatively impact the company’s overall performance. This process can only be implemented by the regulator.

To avoid all the trouble related to the business license withdrawal, a wise organization owner will hire a strong virtual data room provider, upload all the required documentation to the VDR cloud, and supply regulation officers with access to the data they need.

RFP & Procurement Projects

An RFP or Request for Proposal sometimes may be called the Procurement Project, which is a procedure that involves an exchange of high loads of sensitive materials.

An online dealing room is the finest choice since it satisfies all of the needs a company may have in such a case. A VDR supplies its owner with an online environment where the client can keep all the documentation. Apart from that, an online dealing room usually has a built-in security module that provides security systems of the highest standard there is.

Sharing Intellectual Property

Some companies are in the possession of intellectual property. When the company needs to distribute information of such a type, the online data room is the most suitable option. It is so due to the VDR’s toolset which allows its owner to present their work without any risks.

For instance, biotechnical and pharmaceutical organizations depend on VDRs to safely distribute their classified plans, engineering developments, formulation, licenses and other instances of intellectual property with external parties during clinical preliminaries.

Board Communication

There are instances where members of the company administration are willing to be heavily involved in all of the company processes. It is hardly achievable, especially if key personnel is scattered around the world. This is when an installed vdr software becomes handy. It provides a quick yet safe way of communication and data distribution. There are situations when the members of the board want to take a direct role in the development process of a company. It gets tricky if all these people are located in different countries since in the informational age it is hard to find a communication channel that is hard to hack.

A virtual data room provides a safe environment where C-level people (CEO, COO, CMO, etc) can communicate, negotiate, upload, distribute all the information they need within a selected, by the software owner, circle (probably CEO). This becomes possible due to the VDR’s high-standard, multiple-level security system which allows its owner to have complete control over what’s going on in the dealing room. An online data room provides a hack-free environment for people who appreciate their confidentiality.