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A virtual data room (VDR) is a specially designed platform for secure sharing of documents and due diligence. This differs from the file-sharing applications like Dropbox or Google Drive, which aren’t designed for business-related use that require more security and compliance adherence.

M&A when a business is considering an acquisition offer, or needs to share sensitive information with potential buyers in any other manner, VDRs are a great tool to monitor the activity and allow access. A VDR that has robust activity tracking allows administrators to be able to see, for instance who has accessed the files and the time they were access. This can help ensure that nobody has access to confidential documents without authorization. Additionally in the event that a deal does not close, the capability to instantly revoke access is a valuable feature.

Private Equity & Venture Capital – The process of acquiring capital usually requires multiple rounds of sophisticated investors. A VDR online allows companies to securely transfer financial documents and records while maintaining control of the information.

A VDR can also support electronic signature of contracts and other documentation. This means that you don’t have to send draft documents back and forth through email or use an outside eSign provider, which can create additional security risks. Modern VDRs can also provide more granular security options to protect folders and files. They can also apply real-time vector labels, classification labels and permissions to block access by anyone who isn’t authorized. They can also create reports and analytics for admins to keep tabs on the activity of data.

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