VDR due diligence is a procedure which involves multiple parties looking over confidential documents as part a transaction. It’s a key element in M&A deals, but it can be utilized for fundraising as well as bankruptcies, litigation and other business transactions that involve sensitive information, such as research results, patent-pending technology, and more.
Virtual Data Rooms are secure online repository that allows large amounts of confidential documents to be shared outside of the firewall of a business. They differ from cloud storage services such as Dropbox and Google Drive because they offer advanced security features that safeguard privileged and confidential documents, which includes encryption of documents and activity monitoring. VDRs also offer access reports that show who has viewed the document and when they viewed it. This decreases the chance of information being released or divulged without authorization.
In addition to offering central access to all M&A documents, VDRs help streamline and accelerate the DD process by providing a range of features that help improve productivity and collaboration. This includes an easy-to-use interface, automated folder structure, and granular role management.
VDRs are a critical instrument to navigate the M&A process because they enable teams to collaborate on projects with greater transparency and efficiency, while avoiding the pitfalls that can delay or derail a deal. Additionally, VDRs make it easier for parties to communicate information about a project’s status in real-time through notifications and comments. Additionally, document indexing and search features make it easy to find what you’re looking to find.