How a Virtual Data Room Works

A virtual data room provides easy access to sensitive documents through a secure agent app or websites. It is used most often for M&A transactions and asset management. Due diligence, IPOs, and joint venture investments are also popular applications.

For instance life science firms have to communicate with investors and share More Help information on everything from clinical trial results and HIPAA compliance to licensing intellectual property and storing patient files. This kind of data sharing requires lots of transparency. The VDR makes sure that every document is accessible to the appropriate people and that it is monitored when it is being read or modified.

Then there’s the legal industry where the mountains of paperwork can hinder the process of a smooth communication between attorneys and clients. Many law firms use virtual data rooms in order to keep track of and organize important documents.

Other industries employ VDRs in the same way whether it’s to conduct research and development, or collaborate with contractors in the construction of a building, or for the delivery of a service. All of these require the storage and transmission of large quantities of data. This is why a well-designed data room provides all the tools needed to do efficiently and securely. This includes audit trails and versioning, which demonstrate who made changes to the document and when. This can be very helpful when trying to prove that certain comments or edits were authored by a particular person that is typical in some professional contexts.