A Virtual Data Room (VDR) is an online platform for software that can store confidential documents for simple and secure distribution to groups, especially when due diligence is required for deals. It is typically used during M&As and IPOs however it can also be utilized by law firms and healthcare organizations as well as real estate brokers, hedge funds and private equity funds banks, investment banks and other companies.
In terms of security, Virtual Data Rooms feature multiple levels of security that allow administrators to control access down to the folder level. In particular, administrators can set privileges based on user role and track who has access to what documents, and for the length of time. This amount of detail is essential for businesses that need to demonstrate compliance with legal and regulatory obligations.
A well-designed Virtual Data Room should also offer advanced search capabilities and document processing capabilities that scan and convert handwritten, typed or printed documents and also text saved in images to digitally readable formats. This makes it easy for users to find information and provides them with a stronger audit trail that can be used to comply with requirements.
Many businesses believe that all VDRs have the identical features. However, it is important to evaluate their needs and choose an organization that offers the solution that best meets their needs. Before committing to a particular solution, companies should take into consideration the number of users and types and the size of the project and its length, as well as the storage requirements. Also, they should look at the cost structure of the company to make sure that it can handle all types of projects and use cases with a predictable price.