A virtual data room is an application that offers secure, central storage for digital documents. This enables business users to share information with internal as well as external stakeholders. Document version tracking and improved security are also possible.

Investment bankers utilize VDRs for due diligence in M&A transactions, which usually require large volumes of confidential documents to be reviewed by multiple parties. For a deal to be closed, they must be able to upload and review these confidential documents quickly. They also require a reliable storage space to store the sensitive information. A specially designed VDR makes it easy for them to manage with an organized folder structure and robust controls for document access that can be immediately revoked when a deal fails to proceed.

VDRs are also valuable tools for audits and regulatory filings that require transparency with internal stakeholders and external regulators. These projects typically require lengthy collaborations between teams working in different locations and time zones. A VDR is designed to facilitate collaboration and tracking activity as well as communication with all stakeholders is simple using a VDR.

When selecting a service look for features such as drag-and drop functionality for bulk uploads of files, as well as support for the most popular extensions of files. You’ll also want to determine the level of physical security the company provides with offsite backups, redundancy, and fire protection. It is also important to determine if they have the capability to apply dynamic watermarks to printed and viewed documents or set access restrictions for specific IP addresses.