When dealing with large quantities of sensitive data, due diligence is vital for all parties. The most common method of managing due diligence files is to keep them in cabinets that are physically accessible so that they are only accessible by those who have access to those cabinets. This method doesn’t scale well when dealing with larger amounts of data or multiple transactions. A virtual data room (VDR) allows several interested parties to read and comment on sensitive documents without creating copies that could reveal confidential information. VDRs are used for due diligence purposes in M&A transactions, litigations and bankruptcy.
The structure of a VDR’s files is easy to navigate, and the files are organized based on type or project phase. The folder structure can be modified to meet the requirements of specific industries and projects. The program typically comes with a default file index that is based on the due diligence checklist to assist users find the required files quicker.
The VDR must have all security features needed to ensure that nobody is able to access private information without authorization. This includes 256-bit encryption remote shredding, dynamic watermarks restricted viewing mode, secure spreadsheet view, detailed activity tracking and antivirus protection. It should also allow you to limit the possibility of downloading and print documents and limit how long users can spend on a screen or document. Different providers offer different security features, so be sure to compare their features before selecting a service.