A secure online platform wherein confidential and critical information can be shared and distributed securely has come up in the last few years. And this type of service is called Virtual Data Room or VDR.
Nowadays, the Virtual Data Room or VDR has become prominent during the due diligence processes in almost all the transactions. This has substituted upto an extent the paper-based data rooms that used to be set up in hotel rooms or law firm offices. The use of VDR is gaining popularity both in developed countries like the US and UK as well as in developing countries like India and China. The Companies in these countries are increasingly using VDR’s in transaction procedures, especially the due diligence process , and the VDR is also being used internally to prepare documents before initiating discussions and meetings with potential investors.
This is because there are a number of factors due to which the VDR is being increasingly used for the due diligence process of a deal, and those factors or reasons are as follows:
Saves Costs: If the Virtual Data Room is used to carry out the due diligence process, then the cost for the same will come down considerably. This is because the traditional physical data rooms require bankers and lawyers to be present in person during the process, and that too from both the sides – the buy and sell side of the transaction. Hence if a Virtual Data Room is utilized instead of the physical data room for the due diligence process, then the travel costs, printing costs and the costs of the physical space in a hotel or office can be saved.
Saves Time: Apart from saving costs during the due diligence process, using a Virtual Data Room provided by us at www.rrdonnelley.com/venue/de also saves a lot of time. This is because with the use of VDR, the process no longer needs to be linear as all the involved parties can access the documents simultaneously. The parties can also focus on the areas that are more relevant to their part of the transaction. Moreover the advisers can also simultaneously review the documents and the process. In short, the parties involved need not go back to the data room everytime a new question arises, and the whole due diligence process becomes a more interactive, real-time process.
Enhanced Security: During the due diligence process, the involved parties or the Companies have to share their critical and confidential strategic information with each other. And the Virtual Data Room provides an enhanced secure environment for such a scenario as the VDR enables the authorized users to securely restrict the opening, sharing and printing of documents. Moreover, the key documents can also be watermarked and made available only for a limited span of time by the VDR for each individual user.
Transparent And Compliant: During the diligence process, the Virtual Data Rooms keep track of all the activities of the buyers as well as the sellers. Due to this continuous real-time tracking of the process, a high level of transparency comes in and the chance of interpretation mistakes happening also comes down significantly. Moreover, the VDR’s ability to digitally record and store all actions and documents that are disclosed also presents a more compliant source of data in case of any potential litigation.
So, the above-given factors very clearly show how beneficial it can be for you if you use a VDR instead of the traditional physical data rooms during the due diligence process of a deal!!