The common misconception about virtual data rooms is that people consider them to be simple data repositories with very basic functionality. Yes, safe data storage is one of the core functions of dataroom software, but in fact, it offers much more than that.
Virtual data rooms are already making their presence felt in various industries and business transactions, such as real estate, M&As, IPOs, fundraising, audit, and more.
Today, we are going to discuss the major benefits of virtual data rooms and how they help businesses to operate successfully. Let’s start with the basics!
What is a virtual data room?
Online data room software or virtual data room is a virtual storage space that businesses use to store, exchange, and manage business data in a very secure environment.
Additionally, virtual data rooms are a complete virtual working space where employees can collaborate remotely. The online data room allows businesses to directly deal with their customers in B2B and B2C markets.
How does virtual data room help businesses?
Different businesses use data room services for various purposes, and here are some of them.
1. Real estate
Real estate agents and firms use virtual data rooms to tackle the complexities involved in the real estate industry. Covid-19 restrictions forced buyers and sellers to go with online options, and data rooms stepped up to the occasion.
Realtors can store all the information related to real estate listings and add buyers and sellers to the data room. Data room allows realtors to share images and videos of the properties with buyers. Not only that, the videoconferencing option allows realtors to conduct online visual tours of the premises.
With the help of data rooms, realtors can keep buyers and sellers updated about the deal’s progress. Most importantly, firms use virtual data rooms for due diligence during a real estate deal to avoid future uncertainties. All of this ultimately speeds up the process.
3. Mergers and acquisitions
The M&A market is arguably the biggest consumer of the virtual data rooms because of the sheer complexities involved in mergers and acquisitions. M&A transactions involve handling large amounts of data, waiting time, repeat requests, data verification, and whatnot.
First of all, a virtual data room acts as a secure data repository where the seller can upload, store, and organize all corporate documents. Buyers or corporate teams can access any document in a matter of seconds, thus saving a lot of time.
Generally, sellers keep the corporate data available for 3 to 6 months which gives enough time to buyers to assess everything and make decisions accordingly. Buyers nowadays prefer virtual data rooms for due diligence because data rooms give them enough time to verify every single document.
Moreover, sellers can add multiple buyers simultaneously and provide them 24/7 access to business data. This way, sellers don’t have to deal with potential buyers one-by-one, thus boosting the chances of getting the best offer and closing the deal quickly.
Auditing is an important process in corporations, whether they are private or public. In fact, it is mandatory for public companies to get their financial and other records audited from certified auditors, which can be internal or external.
One of the biggest concerns for the companies during audits is the safety of corporate information. Companies may have to appoint supervising teams to make sure that there are no data thefts or misuse of information.
Not to mention, the corporations usually have to pay for traveling and accommodation expenses of auditors. But, a virtual data room can save companies from all the trouble. All they have to do is upload and organize corporate documents in the data room, give customized access to auditors (as per their needs), and that’s it.
This not only saves traveling and accommodation expenses, but it allows the management to monitor the activities of auditors. In fact, VDR management can record every single activity and use it in the future if needed.
Top 3 advantages of virtual data rooms
We discussed the industry-specific benefits of virtual data rooms. Let’s discuss some general benefits of online data room software.
One of the biggest advantages of using virtual data rooms is that they are a very economical option. Virtual data rooms are a cost-effective option in different ways.
First, they help businesses to minimize paper costs, printing costs, and stationery expenses. Corporations have to keep financial and other company records of the last 5 to 10 years as per legal requirements. These tonі of documents can occupy a lot of physical space. Virtual data rooms make sure that companies don’t have to worry about storage costs.
2. Remote access
Virtual data rooms are remotely accessible. The users can access them anytime, from anywhere in the world. All they need is a laptop, computer, smartphone, or tablet. This feature is more useful for remote corporate teams, investors, shareholders, and work-from-home employees.
3. Secure data storage
Virtual data rooms are one of the safest data storage repositories in the world right now. The multiple security features such as two-step login verification, access restrictions, digital watermarking, audit logs, etc., make sure that there are no unauthorized entries, data leaks, or misuse of information.
However, it is important to know that all virtual data rooms are not the same. Therefore, before you choose a data room for your business, it is highly recommended to make a virtual data rooms comparison and look out for these things:
- Do they comply with international security standards?
- Do they have all the features you need?
- How good is their customer support?
- Do they offer a free trial?
Virtual data rooms are not just ordinary data repositories; they are shaping the work practices in different industries. In fact, they are now becoming a necessity for organizations because they are safe, cost-effective, easy to use, and compatible with operating systems and other software.