Last updated on June 26th, 2023 at 11:27 am
INTRODUCTION
In companies privileged data like intellectual property, documents for legal proceedings, mergers and acquisitions, fund raising are usually stored in a data room. Traditionally these data rooms used to be physical data rooms in an actual physical location that would be used to refer these documents. These physical data rooms were usually kept secure with constant surveillance, where only authorized persons could go and refer or scrutinize the business sensitive documents.
In modern times businesses prefer using Virtual Data Rooms. A virtual data room is a cloud-based repository solution for storing and sharing confidential business information.
Huge Cost Difference
Physical data rooms were needed to be rented or hired or bought and then maintained properly under proper security. This meant a huge cost involvement towards its rent, maintenance, upkeep and security. Logs were needed to be kept to keep a record of could access the room and refer the documents. This made it very inconvenient and needed more manpower to supervise the operations. This entailed additional costs of employing more people. Besides one needed to travel to the location to whenever one needed to scrutinize the documents.
Whereas because virtual data room is a cloud based virtual solution, it is less expensive than a physical data room. It can be accessed from anywhere which considerably saves travel time and costs.
Searching through data is time consuming in physical data room
The actual reviewing and searching through all of the documentation is a very difficult and time-consuming process as in physical data room printed documentation is stored. Just imagine how many files and pieces of paper need to be sifted through to find your particular document. Whereas in a VDR documentation is in digital form so organizing, referring, editing of documents is very easy. VDR makes accessing of documents easier and faster. You can do everything remotely and at your own pace. Due diligence can be completed by all parties at the same time, rather than waiting for one group to carry out their research inside the physical room, and then let the other team do their work afterwards.
VDR improves efficiency
One of the best things about a virtual data room is that it gives you the opportunity to reach a vast number of bidders in a small amount of time. In a traditional data room, bidders would have to schedule an appointment for access to the room. However, in a virtual data room, those same bidders would all have access to the room simultaneously, shortening the deal time significantly and resulting in 20 to 30 percent higher bid values.
Many bidders simply do not have time to travel to and from traditional data rooms. Implementing a virtual data room can turn these would-be bidders into buyers, as they can access the data room 24 hours a day, seven days a week from anywhere in the world.
Customized Document Control
One of the innovative features of a virtual data room is that it reduces the risk of human error by allowing a specific user to ensure that the right third parties can view the right type of documents at the right time. Several security measures like – document expire; disable print/download; and dynamic watermarks can be configured at an administrator’s discretion. Customizable permission settings (either user- or group-based) provide greater control over who has rightly accessed certain documents within the data room.
Before a data or document being shared, an administrator has the option to set an expiration date/time or revoke access remotely at any point (during the transaction) for digital rights management. In order to avoid data leak or unwanted document disclosure, a VDR administrator can opt to watermark every page of an electronic document or spreadsheet, or choose to completely disable print or download features. Activity reports allow an administrator to track and audit the activity of users or documents.
Tracking is easy in a VDR
Everything has an audit trail on a virtual data room but it’s difficult to do in a physical data room. In a traditional data room, you won’t be able to keep track of who has viewed which document, but an online data room enables you to keep daily reports of which bidders looked at which documents. Your online data room will also provide you with an electronic record of exactly who viewed which document, and when they viewed it.
VDR helps keep communication confidential
Another advantage that an online data room has over a traditional data room is that communications between you and your bidders can be confidential and detailed. Online data rooms allow you to answer specific questions from one company without allowing others to see that information. Conversely, if you want to add new documentation for everyone to see, the process is made simple and easy to upload additional documents.
So Virtual Data Rooms are the most preferred today because of their efficiency, security and cost-effectiveness.
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.