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A virtual data room is an online, secure repository that allows business users to share, upload and track sensitive documents with third parties beyond the firewalls of the company. The information is then accessible whenever required via the internet or through a dedicated application. Virtual data rooms are increasingly important for many business processes and financial transactions. This article explores why this is happening and provides advice on selecting an appropriate provider.

It’s important to know the requirements for your business before deciding on a virtual space. If you are looking to conduct an M&A deal, it is important that the platform support due diligence and collaboration between both the sell-side and buy-side. The platform must be able to monitor all activities and have custom permission profiles. This will ensure that only the right people have access to the private data.

VDRs can also be used to provide market research and investment memos with private equity and venture firms during a round of funding. This can speed up the transaction process and make sure that investors receive exact information about the company. Furthermore, a majority of VDR providers allow businesses to create a public portal that allows them to share documents with potential clients and partners. This is especially useful in M&A situations where it is important to build trust among potential investors.

When comparing different VDRs it’s also worth weighing the cost of a subscription model versus a one-time transaction. Many vendors offer an annual unlimited-use and unlimited-use model that offers business users the option to pause and start projects or even put multiple data rooms “on standby” as required.


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