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A virtual dataroom, or VDR is a cloud-based repository that allows businesses to securely share sensitive documents over the Internet with third parties. It also assists with due diligence for M&A transactions and debt syndication, venture capital and private equity deals, and more.

The best online data rooms allows anyone to access and comprehend crucial documents even if they’ve no previous experience using digital platforms. They typically provide support 24 hours a day through multiple channels including live chat in-app, email, and phone and include training videos. Many modern providers also offer mobile apps that are responsive. In addition to their user-friendly interface, many VDRs come with advanced features that improve efficiency and security like redaction, fence views, and multi-factor authentication.

VDRs are utilized by a variety of industries for a variety of reasons. Legal firms use VDRs to share confidential files with lawyers, clients and other third parties in litigation, M&A and other business transactions. Banks and financial institutes use them to share documents with investors. Pharmaceutical and biotechnology companies are also using them to share intellectual property and clinical trial results.

Online data rooms are often crucial to ensure due diligence in M&A transactions for companies who wish to move into a new phase. Many VDRs provide detailed information on user and document activity that can be useful to M&A teams during the sale process, helping to avoid leaks. They can also enable companies to determine how much interest shared documents are inciting potential bidders as well as their advisors.