Virtual Data Room

Virtual Data Room

VDR (virtual data room) – is a website created to serve a certain purpose for a specified period of time. It grants authorized users access to the protected document storage according to users’ rights.

Initially, virtual data rooms were intended for use as alternative to physical data rooms upon carrying out due diligence procedure upon mergers and take-overs.

It looked like this: the seller dedicated or rented one or more rooms, where all paper folders were to be gathered. An appropriate schedule was made for potential buyers, who could visit the rooms and work with the documents. But given a considerable amount of paper folders, the time needed to familiarize with documents was too much and substantially delayed the signing of agreements.

For what purpose and how a virtual data room can be used?
It can serve well in practically any situation that demands granting access to confidential information for several persons simultaneously, such as:

  • corporate reports analysis;
  • creating document archive;
  • performing audit;
  • preparation of initial public offering (IPO);
  • mergers and take-overs;
  • seeking and presenting information for investors;
  • bankruptcy and restructuration;
  • preparation to request certificates for medicines or other scientific products.

Alternatives
In our case these are traditional data room, FTP server or intranet portal.

Comparison to traditional data room

Virtual data room is a website, which solves the problem of concurrent access to documents for users having corresponding rights, and gives an opportunity to work with needed documents anytime and anywhere.
Comparing rental and maintenance expenses when using physical rooms, as well as time consumption for workers moving to and from the room can be easily imagined, and there are also expenses for security measures (like data encryption and personalized access). In addition to getting rid of all these expenses, virtual data rooms bring convenience of operation with automated directories, reports and search engines.

Comparison against FTP protocol
FTP protocol involves information transfer in open form, and thus it can be potentially retrieved by someone else between FTP server and the addressee. This protocol also introduces complications with controlling the accounts.

In general, FTP just gives a storage “place”, where “something” is stored, and no options like version tracking or chatting are provided.

Comparison against other tools

A similar functionality can be implemented on a corporate intranet portal; however, creating an intranet site from scratch takes much more time and money than opening a virtual data room. Besides, opening access to intranet for strangers can conflict with company’s security policy.

Of course, e-mail, fax, CDs and flash drives are out there. But only virtual data room can provide the following features: no limits for file size, optional encryption, version tracking, and feedback associated with certain documents. But the major advantage is the “magical formula” 24/7 with the opportunity to access the information stored in virtual room from any location on the planet connected to the Internet.

How to choose a provider?

At the first glance, choosing a virtual data room provider is just like choosing an internet provider, and therefore you can consider the following criteria:

  • Does provider have any experience in implementation of projects similar to the one you need?
  • Cost of service. It’s worth seeking through offers from several companies at the market, which provide this service.
  • Availability of multilanguage interface is an important advantage for foreign companies.
  • Availability of 24/7 support service, which speaks the language that you and your coworkers understand.
  • Opportunity to purchase both retail “box” product and a customizable solution to accommodate your particular needs.
  • Simplicity and usability of virtual data room interface will reduce the time spent on getting familiar with the service and minimize the count of mistakes.
  • Whether provider is giving an option to convert information from paper to digital form.
  • Degree of information protection.
  • Option to select physical data storage location. It should be up to the customer where he decides to store the confidential data – on provider’s side or on your own servers.