A Virtual Data Room Business is an encrypted repository for sharing important documents, with the ability to track and monitor who is accessing the information. VDRs are used extensively across a variety of areas and functions. They are particularly beneficial during the process of negotiating a transaction, which involves third parties having access to large amounts of confidential information. These third parties could be solicitors or employees who work on behalf of the buyer or seller. Usually, it is difficult to share this information in either email or hard copy and also an online VDR allows for simple coordination of due diligence.
Often, VDRs are utilized by businesses seeking capital, aiming for an IPO or undergoing a merger or acquisition (M&A). During the fundraising phase, a company may require sharing information with up to fifty investors each week. A Virtual Data Room helps to manage this influx in third party access and information, while ensuring that only the right person has access to documents and data.
Investors usually require an VDR prior to the release of the termsheet to ensure that they have easy online access to all the details they require about the company. Once a deal is concluded, it can be beneficial to utilize a VDR for updating investors on a quarterly or monthly basis with the major highlights, which include financial performance and other important information about the business. Some companies prefer to provide their investors access to a KPI dashboard that they can Virtual Data Room view in real-time.