A virtual data room allows users to access documents from anywhere with an internet connection. They remove the need for dealmakers to travel to and from piles of documents in a physical location. They can instead access the documents via the internet. This lowers the cost of due diligence and accelerates the entire process.
M&A due diligence is among the most common applications for VDRs. VDRs are ideal to share documents between the buy-side and sell-side of these transactions.
Investment bankers are yet another common group of users of VDRs. They assist their clients with IPOs capital raising, IPOs and M&A transactions that usually involve a large amount of sharing documents. They also must be conscious of protecting confidential information while they allow their clients to access documents.
Life science companies are another big user group for virtual data rooms. They typically collaborate with consultants, accountants and lawyers to develop and store their sensitive documentation. These parties must be able to have access to the data without compromising privacy or creating a compliance issue.
Modern VDRs provide granular access rights that allow the administrator to control who can view the folders and documents in the data room. They can also limit access by the number of times a document is looked at, and restrict access by time or IP address to stop hackers from gaining access. Other security features include customizable watermarks and encryption while during transit and in rest and remote shredding.