Technological advancements and fundamental changes in our working methods have altered our perspective on organizational data. While the employee had previously communicated with his manager in the office in order to deliver an order including sensitive papers, the identical data would now most likely be sent online. Whether data is transmitted internally among colleagues or externally with personnel in other firms, data security is critical.
However, in other cases, the information shared is so sensitive that any breach of security, whether accidental or unintentional, might result in major financial or reputational harm. This is where a VDR comes in handy.
What is VDR?
A VDR is an internet-based application that provides secure, location-independent access to confidential documents. All documents relevant to Due Diligence can be structured in the VDR and targeted for reading and/or downloading by the user group (e.g. bidders). Through data encryption and storage, the virtual data space provides the highest level of security. Furthermore, particularly sensitive papers might be watermarked and restricted from downloading. In the data room, detailed access privileges govern which users can only read, download, or change data. And the Administrator of a virtual data room has complete control over all transactions in the data room at all times using activity protocols.
Real Help of VDRs
Initially, virtual data rooms were created as an alternative to physical data rooms during M&A due diligence. More information about VDRs for M&A deals read here https://australian-dataroom.net/deals/virtual-data-rooms-for-ma/.
Before the era of the spread of broadband Internet access, the familiarization of potential participants in the transaction with documents looked like this:
- The vendor assigned or rented one or more premises into which folders containing paper documents were placed, and the rent or lost profit from the abuse of the facilities was documented as a cost.
- A timetable was created for possible purchasers (bidders) to enter the room and deal with papers, which, due to their large quantity, greatly lengthened the transaction.
- If the bidders came from another city or country, their representatives cheerfully traveled to global cultural centers and, grudgingly, to industrial zones, spending time on the road and money on enhanced travel allowances.
- Actually, the virtual data room only addresses the issues of time, cost, and convenience of access to documents.
Currently, virtual data rooms accompany the activities of companies in other areas, from providing information to partners of investment funds to obtaining certificates for medicines, that is, wherever it is necessary to provide convenient access to confidential information for a certain period of time to a certain circle of people who may be from a friend for thousands of kilometers