A virtual data room is an online secure repository that allows business users to upload, share and keep track of sensitive documents with third parties outside of the company firewall. The information is accessible via the internet or via an application on demand. Virtual data rooms are becoming important for many business processes and financial transactions. This article explores why this is the case and provides advice on selecting the most reliable service.

It’s crucial to know the requirements for your company prior to deciding on a virtual room. If you plan to conduct a M&A deal, it is crucial that the platform supports due diligence and collaboration between both sell-sides as well as buy-sides. This means that the platform should have a custom permissions profile that can be customized and detailed activity monitoring to ensure that only the right people can view your confidential documents.

VDRs are also used to share market research and investment memos with venture and private equity firms during a round of funding. This will accelerate the process and ensure investors get exact information about the company. Furthermore, a majority of VDR service providers allow businesses to create a public portal to share documents with prospective clients and partners. This can be particularly useful in M&A situations when it’s necessary to build trust with potential investors.

It’s important to compare the costs of subscriptions with one-time transactions when you compare VDRs. A lot of vendors offer subscriptions with unlimited usage, which allows users to start, pause and anchor offer multiple data rooms at any time.