What Are the Benefits of Using a Data Room in Your Company?
The benefits of virtual data room software are something familiar to deal makers and financial institutions. Virtual data rooms have been at the forefront of dealmaking for over 15 years and are now immensely popular in the M&A industry. However, data room software is not limited to M&As anymore. They have rapidly replaced traditional data management systems in almost every industry around the world.
Today online data room software is a highly preferred choice for data management, virtual communications, and project management. Here is a short introduction to virtual data rooms and how they can help your company in terms of data, operations, and risk management.
What is virtual data room software?
A virtual or electronic data room is a digital communication tool and document repository that allows businesses to manage corporate documents or share data during dealmaking.
In broader terms, data room software combines multiple technologies to perform the following functions:
- Data management or sharing
- Project or deal management
- Virtual business communication
- Business meeting management
The virtual data room demand in different industries has grown to the extent that virtual data room providers are now shifting to industry-specific data room services.
Moreover, VDRs are increasingly becoming a mandatory component in financial deals like fundraising, initial public offerings, corporate consolidations, joint ventures, strategic partnerships, real estate trading, and asset management.
You can read more about data room uses and virtual data room providers on Datarooms.org. This website contains a detailed guide on virtual data rooms, their use cases, and selection criteria.
Benefits of using virtual data rooms
1. Manage your data efficiently
Data management is much more simplified with data rooms. Once you subscribe to certified data room services, you can create multiple user groups or data rooms and upload documents according to the users in the group.
You can create separate groups for HRM, finance, tax, and marketing departments and upload relevant documents in them. Similarly, you can create folders and subfolders as per your needs. Users in the VDR can access, upload, edit, share, distribute, annotate, download, print, and save documents without any third-party app.
2. Keep your business data safe
Virtual data rooms are among the safest digital technologies in the world right now. Data rooms possess some of the most powerful security tools. For instance, the 256-bit SSL data encryption in VDRs is also used by military institutions and banks.
Online data room software also allows you to control the files in your VDR fully. That said, you can decide who is allowed to download, edit, or share a file and who isn’t. Also, you can:
- Revoke access to any file anytime
- Remove or add any user in the VDR
- Delete and purge any device from the data room
- Restrict anyone from sharing, editing, scanning, annotating, altering, downloading, or printing
- Limit any user to read specific portions of the file via the fence view mode
3. Work more efficiently during business deals
Unlike other free cloud document repositories like Dropbox, virtual data rooms provide you with smart tools to streamline the deal making process. For example:
- Virtual data rooms allow you to track the bidders’ activities so you can assess who has shown interest in your pre-due diligence documents.
- Built-in features like smart or full-text search allow bidders to search desired files in a matter of seconds.
- Bidders in the VDR will get immediate notifications as soon as you update a document or upload a new file or content.
- Virtual data rooms have built-in messengers or Q&A systems that keep business communication encrypted and safe in one place.
- Online meeting management tools in the VDRs help you hold, record and streamline meetings during deals.
Apart from this, you can start negotiations with more than one bidder at a time and close the best possible deal.
What to use a data room for?
Online data room software, as mentioned earlier, is not just an M&A solution anymore. Its usage has extended to various industries, including:
- Financial institutions
- Life sciences industry
- Legal industry
- Oil and energy sector
- Real estate industry
- Telecommunication industry
- Information technology sector
As a bonus tip, below are some of the best data rooms to go for in 2023:
- iDeals — mostly used in the law industry, life sciences, M&As, and real estate.
- DealRoom — known for its usage in M&As
- Merrill Datasite — famous for corporate development
- Digify — suitable for SMEs
- Google Workspace — most suited for online meetings and SMEs.
We hope that among the solutions above, you’ll find your perfect tool for efficiently managing data, processes, and security. Just be sure to compare virtual data rooms to make sure the solution of your choice checks all the boxes and meets all your business needs.