The Top 6 Ways to Use a Secure Virtual Data Room

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Shivangi Gupta
Shivangi Gupta
Shivangi adds great value to the team with her prompt and well-researched insight. Her unprecedented love for literature is reflected well enough in her writings. She takes you on a tour to a world apart with the visual imagery in her content that urges the readers to ponder. To get the brain juices flowing, she makes sure to have a brewing cup of coffee next to her all day.

Did you know that virtual data room software was once limited to mergers and acquisitions? Though the inception of data rooms may belong to mergers and acquisitions, there is hardly any industry or business type that hasn’t used data room services one way or another. 

Commercial organizations, enterprises, government agencies, private equity firms, public organizations, corporate boards, professionals, nonprofits, clubs, associations, and unions use virtual data room services according to their needs. Although the list is fairly long, below are a few major uses of data rooms in different fields.

Mergers, Divestitures, Consolidations, and Acquisitions

As stated above, the global financial sector uses data rooms for mergers, acquisitions, divestitures, and similar transactions. M&A was and is the biggest consumer of data room technology, and North America tops this list. Now, how does it help the parties involved in M&As?

Virtual Data Rooms for Sellers

Sellers can use a virtual data room M&A in multiple ways. First, they can use it to create temporary pre-due diligence rooms. They can invite all the potential investors or buyers who have shown the slightest interest in the transaction. Sellers can then create due-diligence data rooms for those who have shown interest in proceeding further. 

Most importantly, by using an M&A data room, sellers can:

  • Control who can or cannot access specific folders of files
  • Edit, share, download, change, or print documents
  • Revoke access to any file at any time

Virtual Data Room for Buyers

For starters, buyers can save the money that they might have to spend on verifying documents physically. They can simply:

  • Join the data rooms
  • Access due diligence documents
  • Get their advisors and investors on board
  • Request and receive any document in real time
  • Communicate with the sellers whenever they want

Litigation and Law

Lawyers or the legal industry stand as one of the biggest consumers of virtual data room software. They have even stronger reasons to use the technology, as security is their biggest concern. Lawyers are legally bound to protect their clients’ personal details, and any data leak can bring them to a court of law.

Virtual data room software can serve the legal community in the following ways:

  • Corporate lawyers can use data rooms as their permanent contact point with their corporate clients. They can arrange meetings, share and receive data, and use it as a document storage facility.
  • M&A lawyers can use data rooms as a communication channel during the transaction.
  • Civil attorneys use virtual data room services as a central repository where multiple lawyers can remotely access their case files and other information.

Board Communications

Data rooms are the answer to “how to ensure that the board members have easy and secure access to board documents 24/7?”. There are other amazing meeting tools for boards, but most of them don’t have built-in data repositories. Similarly, many meeting tools lack the latest meeting management features.

On the contrary, a virtual data room is an all-in-one solution. Here is what it allows to do:

  • Store and organizes every single document they need
  • Manage meetings from start to end
  • Prepare agenda, minutes, and notes within the data room
  • Sign documents electronically through electronic signatures
  • Cast votes electronically
  • Give online presentations through presenter mode
  • Share files during the meeting without closing their video screens

Compliance

Businesses from different industries use virtual data room software for compliance purposes. For example, any financial institution in the United States must manage its digital data according to FINRA guidelines. Using FINRA-compliant virtual data room services will automatically fulfill the compliance requirements for financial institutions.

Similarly, using HIPAA-compliant electronic data room providers will solve compliance issues for healthcare institutes in the United States.

Fundraising

Fundraising or capital raising is a long process that usually continues for weeks or even months. The biggest problem for the fundraisers is to ensure document security while allowing potential investors to have easy access to mandatory documents.

A virtual data room makes sure that:

  • Fundraisers have 100% control over the sensitive files
  • Investors can access documents 24/7
  • Everybody involved in the transaction can communicate on a central platform
  • Fundraisers can share large-sized files with ease

Real Estate

Although data rooms are handy for both residential and commercial real estate, the latter can benefit more from the technology. Virtual data rooms unite investors, financial intuitions, lawyers, buyers, sellers, and realtors on a single platform.

They can use virtual data room software for:

  • Real-time communication; even a large group of users can hold a meeting in data rooms
  • Easy data sharing, especially large-sized files such as blueprints, prototypes, etc. 

Security and Ease: Conclusive Thoughts

Although the global corporate world uses data rooms for tonnes of reasons, security remains the biggest selling point of electronic data room providers. All the consumers mentioned above need unbreakable digital security.

Second, the ease of use is another major reason for massive data room consumption. Data room vendors integrate lots of features in such a way that even a person with basic tech understanding can use this technology with ease.

For these major reasons, data rooms remain a dominant technology for businesses today — for M&A, litigation, board communications, compliance, fundraising, real estate, and many other use cases. Data rooms are a one-stop-shop for sensitive business transactions.

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