A Virtual Data Room Business (VDR) is a secure repository that allows sharing of important documents that are private, and has the capability to monitor and record information access. VDRs are used across a range of business functions and industries. They are particularly beneficial during the deal process where third parties typically require access to large quantities of confidential data. These third parties may be solicitors or employees with a valid license working on behalf of the buyer or seller. It is generally difficult to share this information on hard copy or by email and also an online VDR facilitates the coordination of due diligence.
Often, VDRs are utilized by companies seeking capital, seeking an IPO or undergoing a merger or acquisition (M&A). During the fundraising phase, a company may require sharing information and host roadshows for more than fifty investors every week. A Virtual Data Room can help deal with the influx of data and third-party access, but still maintaining control over who has access to documents and data.
Investors often seek an VDR prior to the release of terms sheets, in order to ensure that they have online access to all the information they need about the company. It is a good idea to use a VDR once the transaction has been concluded to provide investors with key information like financial performance and qualitative information about the company. Some companies provide their investors a dashboard of KPIs that they can access in real-time.
