Usage of Data Rooms in various industries

Which Industries Use Data Rooms and How?

While the potential uses of a VDR are virtually unlimited, data rooms have proven to be extremely useful for the use cases and processes listed below:

Due Diligence

The critical due diligence phase of an M&A deal involves sharing a large number of confidential documents with one or more parties in a secure environment. A VDR provides a powerful way for investment bankers and advisors to manage their M&A deals, and make diligence faster and easier for everyone involved.

Compliance, Audits & Regulatory Reporting

While regulatory requirements differ across industries and from country to country, the majority of compliance projects share a common workflow that requires the sharing of documents between a company and numerous third parties including business partners, external auditors, and regulators. Here’s how a VDR helps streamline the compliance workflow:

1. Whatever your industry, there is a regulatory requirement that needs to be filled. This requirement is typically outlined as a checklist of items you need to provide documentation for.
2. This checklist can be imported into the VDR using an Excel import. Each checklist item is labeled as Required, Not Applicable, or Assigned to a team member or department.
3. Your team uploads supporting documents for each applicable checklist item. The audit team is notified as soon as documents are uploaded to the VDR. Auditors may comment on documents or ask questions, all within the safe space of the VDR. Revised documents may be added as new versions.

Compliance requires the sharing of sensitive documents with third parties beyond the firewall.

RFP & Procurement Projects

A Request for Proposal (RFP), Request for Information (RFI) or procurement project requires the exchange of detailed specifications and documentation. A VDR can be used to host all of your project materials for your RFP/RFI or procurement project in one secure place and facilitates Q&A with your bidders within the VDR platform. Using the VDR you’ll:

1. Present bidders with project materials
2. Communicate bidding instructions &
3. Host a facility for Q&A

Litigation

For law firms, a data room supports the two-way sharing of privileged documents between your litigation team and your client, as well as handling contributions from external experts and other outsiders involved in the litigation. Documents are centralized and kept secure, even when leaving the firm’s firewall. A VDR also allows you to track user and document activity for peace of mind.

Sharing Intellectual Property (IP)

For many companies, intellectual property and proprietary information are the lifeblood of their business. A VDR makes sensitive information related to intellectual property available to external parties outside the walls of the organization without putting your IP in jeopardy. For example, biotech and pharma companies rely on VDRs to safely share their highly confidential formulations, molecules and patents with external labs and regulators during clinical trials and as part of fundraising and licensing.

LP Reporting / Investor Reporting

Private Equity firms and Funds can use a VDR to share portfolio information, tax information and fund documents in a professional and transparent manner. The virtual data room maintains a level of organization which promotes the accuracy and legitimacy of the information they are sharing. Reporting is a recurring function, and using a VDR makes the required documents accessible 24/7 to investors so that they can get all the information they need anytime, anywhere.

Portfolio Company Reporting

A virtual data room provides a place for portfolio companies to upload their monthly and quarterly reports. With a VDR they are able to showcase the strengths and capabilities of a business in an organized manner with interested third parties. Folder level security and user permissions make finding the right information quick with so many company’s documents being constantly shared. Reviewing all these documents is made easier with bulk downloading so that communication with investors is fast and efficient.

Summing Up

Since the 2000s, virtual data rooms have evolved into mature and highly specialized services for sharing confidential files online with professional-grade security and control. This category of technology assists companies in multiple industries that require the utmost security, control, and ease of use when sharing documents for mission-critical processes.

Not all VDRs are created equal, and that differences in architecture, feature sets and architecture can have a big impact on performance, efficiency and how effectively they adapt to your processes and support your unique business needs.