Small companies that handle large amounts of confidential data may find the use of a virtual data room useful. A virtual data room is an online repository where documents are stored and distributed. It’s an innovative and convenient way to review due diligence data and cut down on the time it takes to close a transaction.
Virtual data rooms or VDRs replace physical document storage and inspection. Documents can be uploaded to the VDR and viewed by selected individuals. It may be necessary to obtain login credentials to gain access to the VDR. The VDR is a controlled and secure environment and only individuals with permission can obtain the data located within. Conventional data rooms require the supervision of an individual or individuals and are only available for inspection at specified times. Since there is often a large amount of data, it can be difficult to make copies and review all the data in a single day.
The use of VDRs have facilitated merger and acquisition transactions by expediting the due diligence process. Rather than have a physical location with hard copies of documents for review, everything is available online and can be viewed without supervision at the recipient’s convenience.
Highly confidential documents, such as a company’s financial statements, tax returns, historical performance, customer information and other highly sensitive company data is stored in the VDR. Other data stored might include a list of the company’s assets, employee data, suppliers and standard agreements, such as a confidentiality agreement or a purchase contract, might be included. Users can easily download all of the data contained in the VDR and reviewed at their convenience. Documents, such as contracts, can be printed, executed and returned, if necessary.
Virtual data rooms have the ability to facilitate a deal more quickly than the conventional physical data room. This is because all the data and documents are available 24 hours a day every day. There’s no need to schedule a meeting to go over documents related to a merger or acquisition. Since standard agreements are made available for download, time is not wasted faxing or emailing documents to get signatures. Everyone in the process has access to all the same data and documents. If a conference call must take place, all parties involved can easily download the same documents and discuss the same data. Travel time will be saved and no one will have to rearrange their schedule in order to attend a meeting.
While it may still be necessary to meet in person to inspect assets or buildings, using a virtual data room saves travel time and can ensure that a deal will be completed much quicker than a physical data room. Many conference calls may be needed in order to reach a conclusion to a deal. Imagine how much more time it would take to schedule and coordinate in-person meetings.
A virtual data room is secure and convenient. Small companies would do well to consider using a VDR to save time and money. Transactions will go more smoothly and more closings can take place. The time saved traveling to and from meetings can be used more effectively to go out and solicit new business.