Last updated on September 14th, 2023 at 08:44 am
The virtual data room market was valued at USD 690.59 million in 2020 and is expected to reach USD $3.66 billion in 2027, at a CAGR of 15.12% over the forecast period 2021 – 2026.
An increase in the use of cloud storage technology by large and small businesses is facilitating and contributing to the faster growth of the data room for investors market. Moreover, it is a cost-effective way to eliminate the need for physical storage, lessen paperwork, reduce the cost and time of travel.
All these result in huge savings of time and money. The data room software and the data room service provider market is majorly driven by the rapid surge in demand for safe online data storage and highly secured file sharing solutions for exchanging confidential business data, documents and information among businesses and legal agencies. Moreover, a virtual data room by a reputed data room service provider like
Confiex Data Room delivers a safe, bank grade security platform to organizations and business enterprises, which helps them to store, send, and access all sensitive information such as deal negotiations, contracts, and biding information anywhere, anytime and on any device. The data room for M&A platform is widely preferred across many businesses owing to its numerous benefits, such as safe document storage, real-time secured file sharing of document, and providing integration features with multiple databases simultaneously.
The growth dynamics driving the virtual data rooms market
1. Increased volumes of data generation
The biggest driver of the virtual data room industry is the exponential growth in data generation itself, more particularly due to the complexities arising from M&A activities. Most companies view reputed data room service providers like Confiex data room as the most reliable online data storage and secure file sharing platform. This has resulted in volume of data in circulation globally and consequently the virtual data room market has grown exponentially over the past two decades and continues to grow at breakneck speed, even now.
2. Growing concern over data security and cyber-security
According to a recent global survey, one in every 5 companies loses intellectual and business sensitive data due to cyber-attacks. These cyber security threats are hampering online transactions and deal making on a large scale. Corporates often operate under pressure, which may cause negligence and lead to cyber-attacks, especially during M&A activity. The security breaches occur during these times because various third-parties that they interact with use different technologies. And your organization may not be able to identify, track and prevent cyber-attack during such times as it may not be technologically equipped to handle cyber-attacks during such times.
Facebook is only a $900 billion company because it ‘owns’ and closely guards the data that users share with it.
Data breaches in such circumstance prove very costly as many large companies have seen over the past few years. Hence, there is a growing demand for the bank-grade security and technologically advanced tools of deal making of reputed virtual data room service providers like Confiex Data Room.
3.Growing need to deploy specific tools and technologies to enhance data accessibility and data convergence
Most companies nowadays realize the importance and magnitude of key features such as data accessibility, data authenticity and data convergence that virtual data rooms provide. They offer metrics and standards that influence data accessibility and data convergence effectively. Since business data is present in different formats like transactional data, XML data, web based data and structured data bases, reputed virtual data room service providers enable sophisticated tools that help convergence and data presentation techniques to enhance efficiency of data analysis; ensure data scalability; maintain data integrity and consistency to support business processes effectively.
4. Face challenges of Data Privacy and Data Integration successfully
Data privacy and data integration is a very important aspect of every business deal, as that data is used in various applications across organizations. This includes highly sensitive enterprise data such as customer data, employee details, legal and other transactional data. Particularly during M&A the integration team needs to securely integrate this data with its own organization data. This gives rise to trust issues during and before closing of the deal. To maintain privacy and data protection during the deal process reputed data room service providers of data room for M&A like Confiex data room, ensure adoption of technologies like block chain, and AI to enhance the security of their data room for investors, and adhere their operations to regulations and data protection laws.
5. VDR facilitate Compliance
The arrival of GDPR as well as other data protection laws are likely to be just the beginning for data protection laws. What this means is that data security is no longer an issue of good corporate practice or governance for companies – it’s a regulatory compulsion.Therefore, even companies that hadn’t really considered themselves to be data companies are using virtual data rooms to ensure that they’re protected from the downside in case of a data breach.
There’s a growing acknowledgement among companies’ world over that it’s one thing to be the target of a data breach, but it’s quite another to suffer a breach and for regulators to find out that they had no controls in place to circumvent such a cyber-attack contingency.
6. Growth in M&A transactions
As mentioned at the outset, an exponential explosion of M&A deals the world over, has led to a massive growth in the use of the services of reputed data room service providers and data room software.
Virtual data rooms are now universally accepted and implemented in the due diligence process, to help significantly speed-up the due diligence process. This in it’s own way, contributes to faster deals that add to aggregate annual transaction volumes.
7. Professional and Managed Services of VDR can enhance its CAGR in the future
Virtual data room also offer professional and managed services such as secured data storage, data management, data distribution and exchange, bank-grade security, multi-lingual support, full text search, in-document linking, and a variety of other advanced features.
8. Increased usage in other industries
The Virtual Data Room Market is Segmented by Type (Software, Services), Organization Size (Small- and Medium-scale Organization, Large Organization), Business Function (Legal and Compliance, Financial Management, Sales and Marketing), End-user Industry (BFSI, IT and Telecommunication, Healthcare), and Geography.
Mimicking the growth in financial services, other industries – particularly healthcare – have taken to using services of reputed data room service providers like Confiex data room for their own data storage and sharing requirements.
The average cost of a data breach across several industries underlines why companies of all stripes are investing in virtual data room technology.
How VDR helps a business grow?
Virtual data room is a military-grade secure platform for online data storage and secure file sharing due to its advanced technology and security features. It is not only a cost-effective way to eliminate the need for physical storage, reduce the use of paperwork, and decrease the cost of travel, but it also helps to enhance your operational efficiency, reduce time waste, and is eco-friendly, Virtual data rooms are a priceless means for helping companies to deal with storing and sharing data, mergers and acquisitions, due diligence, and other processes containing sensitive information.
The main purpose of any virtual data room is to keep, organize and share the most valuable data during a deal in a secured location. The security protocols around the opening, sharing, and printing documents create a detailed activity trail for participants and auditors. Being able to see who has viewed a document with an audit trail takes away all of the guesswork. M&A teams can use the advanced tools of a data room for investors as a way of discovering what their clients are most interested in.
From the buy side, businesses are able to examine all the documents to help predict any future risks, pitfalls, and trends.
Conclusion:
IBIS World’s 2021 report showed an average annual growth rate of 15% in the period 2016-2021 and the predictions estimate an annual growth for virtual data room providers to be between 12%-16%. The virtual data room market was valued at USD 690.59 million in 2020 and is expected to reach USD $3.66 billion in 2027, at a CAGR of 15.12% over the forecast period 2021 – 2026
With the predicted growth and use of VDRs, it’s feasible to expect an exponential increase in investments for VDR technologies.
The Confiex team specializes in providing premium virtual data room solutions tailored for businesses. With their vast experience in working with document sharing platforms, they have been actively supporting the Virtual Data Room community since 2015 by offering valuable information to users free of charge.