Executives, board members, and business leaders use virtual data room services for secure data storage and efficient collaboration with third parties.
But there are dozens of virtual data room providers out there today, so it might be challenging to choose the right vendor for your company. Still, the right choice is crucial, as it may affect the outcome of a deal.
The guide below will help with the top tips and most important steps when looking for a data room.
What is a virtual data room?
A virtual data room, also known as an electronic data room, is a secure online repository used for the storage and distribution of digital files and documents.
Online data room software is especially helpful during the following business transactions and processes:
- Mergers and acquisitions. A selling and an acquiring company can use a VDR as a secure and controlled deal environment. Its features allow uploading and sharing confidential due diligence documents fast and easily, communicating on M&A questions, and speeding up the overall transaction.
- Fundraising. Startups and businesses aiming at raising capital need a virtual data room for sharing documents with investors and tracking their activity to understand who is the most engaged and interested.
- IPOs. Companies that want to go public need a data room to provide multiple external parties like auditors, underwriters, and potential investors with secure and transparent access to their financial IPO data.
- Board communications. Board members use VDRs for managing and conducting board and committee meetings, sharing board materials safely, creating and assigning tasks, and monitoring performance. You can learn more about data room solutions for board directors.
5 reasons to use data room software
Apart from secure storage and sharing of confidential files, there are other numerous benefits of using a virtual data room.
- Reduced cost. Virtual data rooms are much more affordable and cost-effective in comparison with physical data rooms. First, there are no travel-related expenses like tickets or accommodation. Second, users don’t pay for the data room rent and maintenance. Together, it can save thousands of dollars per year.
- Efficient communication. Many data room vendors offer a variety of collaboration and communication tools. For example, live chats, thread discussions, comments, notifications, expert assigning, Q&A sections, etc.
- Faster deal completion. VDRs allow users to quickly upload, update, and share important documents. It helps to keep partners, investors, and team members up-to-date. In its turn, it facilities decision-making and leads to faster deal closure.
- Accessibility. Virtual data rooms can be accessed anytime and anywhere. Moreover, hundreds of users can view documents simultaneously without interfering with each other’s work.
- Eco-friendliness. Virtual data rooms help to avoid printing and storing thousands of paper documents. Furthermore, remote access to a VDR prevents users from traveling, which reduces carbon dioxide emissions. It all has a positive impact on the environment.
Criteria of the best virtual data room providers
When looking for a virtual data room, focus on the following characteristics.
| Criteria |
Description |
| 1. Strong data security |
Choose a provider that offers:
- Access security features like two-factor authentication, granular user permissions, and IP access restrictions.
- Document security features like redaction, dynamic watermarks, and remote shred.
|
| 2. Advanced features |
Make sure a data room has:
- Document management features like bulk file upload, drag-n-drop, automatic index numbering, and easy text search.
- Communication features like threads, live chats, video conferencing, comments, and notifications.
- User activity tracking features like reports and audit trails.
|
| 3. Professional customer support |
Pay attention if a vendor offers:
- 24/7/365 support to be able to reach a support rep any time there’s a need.
- Multilingual support to be able to communicate with a support specialist in a language you prefer.
- Multichannel support to be able to contact a support team by various means like a phone, live chat, or email.
|
| 4. Others criteria |
Check out the following:
- Free trial to test the platform for free before buying any services.
- Experience in your industry to make sure a platform corresponds to your business purposes.
- Tariff plans to choose the most suitable pricing option according to your needs.
|
5 steps to take when choosing a virtual data room provider
Here’s a short instruction on what to do to choose a data room vendor most suitable to your project.
- Identify the needs. Define what you require a VDR for, how long a project will last, how many users will access a room, and how much storage capacity a data room should have.
- Set budget limits. Define how much you can afford to spend on a data room, as prices start from $99 a month and can reach thousands of dollars per a year.
- Read the reviews. Learn what other users think of providers on data room review sites.
- Compare virtual data rooms. Choose 2-3 vendors and compare them in terms of functionality, experience, and cost.
- Book a demo. Contact a provider so that a sales rep can show you how a data room works and what the pricing options for your project are.
