A virtual data room (VDR) is an encrypted platform for sharing sensitive documents that have granular security and a range of customizable access permissions. When compared to rudimentary storage options for data that generally offer only viewing and downloading the documents, a VDR can also provide search functionality and easy collaboration between several parties, and the ability to customize access privileges for every user.
During M&A deals, the due diligence process will require a large amount of data to be reviewed by many different parties. This could lead to lengthy and drawn-out deals, or make the deal unworkable in the event that the documentation isn’t completed and properly prepared. A VDR allows all relevant information to be shared, reviewed and access by multiple parties from one location. This reduces the time it takes caused by miscommunication or lack of documentation.
VDRs can be used to serve a variety of business needs, such as preparing portfolio companies for public listing or for fundraising, in which the company is required to share confidential financial documents with other parties. The ability to arrange documents into logical folders that facilitate navigation and grant access rights at a single click makes these tools extremely useful for investors.
For the life science industry, VDRs are the perfect solution to share confidential intellectual property with potential investors and partners. With the help of granular document activity tracking it is possible to track who has viewed what documents. VDR allows users to know exactly who has looked at which documents and for the length of time. This information can be helpful to determine if a project is adequately explored and generating interest among potential investors, and could assist in avoiding revealing proprietary information to the wrong people.