Virtual data rooms, also known as deal rooms, are essentially online repositories that companies and individuals can use to store and share information.

The nature of this information may or may not be confidential, however, data rooms are typically used to communicate important company information that is to be kept safe from disclosure. If you are a company considering the merits of online data sharing and information storage, keep reading to find everything you need to know about virtual data rooms:

The Need For VDRs

Virtual data rooms have replaced physical data rooms that were once immensely popular among bigger and multinational companies to store confidential company data and conduct dealings.

Ever since the globalization of the business environment, there has been a witnessed need for all business operations and pertaining processes digitally to ensure efficiency and coherence in global operations, and virtual data rooms have been helping companies do just that.

Virtual data rooms such as Firmex were first-movers in this realm, have established their presence as industry leaders, and are trusted by some of the biggest corporations worldwide.

Benefits Of VDRs For Companies

Virtual data rooms pose several benefits for companies of all scales and sizes, and the most common benefit comes from the safety and security that VDRs pose. Companies need a safe avenue to store confidential information which can be accessed remotely by relevant parties, and cloud-based VDRs allow them to do just that.

In addition to safety and convenience, virtual data rooms help companies go paperless, and avoid bulky storage of physical company documents.

Uses Of VDRs For Companies

1.     Mergers and acquisitions

Mergers and acquisitions are the number one use for VDRs, and given how globalized yet connected world economies have become, the rate at which M&A transactions materialize has grown multi-fold. In an M&A transaction, both parties have to conduct due diligence to finalize their business deal, and VDRs serve as online repositories for both parties to safely share their confidential company and financial information.

2.     Contract signing and storage

When companies are not engaging in mergers or acquisitions, they may be entering a joint venture or a mutually beneficial deal with another company. These deals are often conducted remotely despite the company headquarters being located nearby. VDRs serve as a safe avenue for companies to sign and store contracts accordingly.

3.     Audit and compliance

Companies have to undergo audits on an annual basis which may or may not be authority-directed. Auditing practices require companies to share all relevant data with multiple parties, and this data is usually present in large volumes.

VDRs help companies ensure that all their financial data presented for auditing purposes is kept safe, not misused, and shared with all relevant parties including accountants, internal regulators, and external regulators.

Conclusion

Virtual data rooms are a multipurpose technology that poses many benefits for companies of all sizes. As explained, virtual data rooms allow companies to store data, share information with multiple parties, keep confidential documents safe and bring life to corporate deals. They are the virtual equivalent of a data repository, library, and boardroom, all in one.