The use of virtual data rooms has now extended to different types of businesses. As a result, projects teams may use data room software as a medium of communication or data sharing, while the financial sector has been using it for mergers and acquisitions for over a decade now.
The reason why more and more businesses are adopting data room technologies is mainly due to customized data room services offered by datarooms-review.com. For example, VDRs like DealRoom are specifically built for M&As, Ansarada virtual data rooms are highly used by freelancers, and iDeals is a preferred option for lawyers and investment bankers.
Simply put, data room services can now be categorized into different types, and here are some of them.
Common types of virtual data room services
1. Data rooms for real estate
Online data room software is a commonly used technology in real estate, especially for commercial real estate. Commercial real estate transactions are usually million-dollar projects requiring the management of complex paperwork, negotiations, and regular communication.
An electronic data room provides solutions in different ways. For starters, the real estate firm can upload hundreds and thousands of documents by simply dragging them to the data room. These documents may include regulatory documents, asset portfolios, technical diagnostics, and other important records. Some data room services include pre-VDR services, including assistance in structuring and corroborating data and archives.
Virtual data rooms can be used for arranging live video tours of different properties; the management can add multiple investors to the video conferencing simultaneously. Apart from that, a virtual data room’s Q&A modules help investors and other concerned parties to conduct a live Q&A session. Everyone in the Q&A session can ask or answer questions, and most importantly, VDRs allow you to track all the activities in the data room.
2. Data room for due diligence
Due diligence data rooms are created to facilitate due diligence (legal, business, or financial due diligence) during unusual business transactions. Due diligence is a long, complex process in which one business entity examines or verifies the required documents of another company.
For example, if it is financial due diligence, the company will verify the financial statements of a business involved in the transaction. Similarly, in the case of mergers or acquisitions, buyers do financial, business, and legal due diligence.
However, it is not easy for the seller or target company to just hand over its confidential business documents to the buyers. Virtual data rooms help such companies in presenting necessary data to parties involved in a transaction without compromising their data security.
The seller company can add or remove users from the data room whenever needed. It can decide who can or cannot access certain documents and restrict users from printing, editing, downloading, or altering any document. The VDR management can even use the “fence view” feature on documents, preventing any user from taking photos, screenshots, or creating scanned copies of documents.
Representatives from buyers and sellers can communicate in real-time using different tools in the data rooms. They can do Q&A sessions, videoconferencing, and communicate privately through data room messenger. Sellers can use audit logs to assess what type of documents have been accessed mainly by the buyers and structure their records accordingly.
Last but not least, one seller can deal with multiple buyers simultaneously, boosting the chances of a successful deal. Some of the best data room providers offering customized services for due diligence include DealRoom, Merrill Datasite, Firmex, iDeals, and ShareVault.
3. Data room for lawyers
Law firms use virtual data rooms to manage large piles of documents, serve multiple clients, and execute highly confidential projects. It goes without saying that law firms are legally obligated to ensure the safety of confidential details they possess.
Data room software provides everything a law firm needs. For example, virtual data rooms are certified, secure data repositories where all those documents can be kept safe. Lawyers can retrieve documents whenever they want from anywhere, using any registered device.
The second challenge faced by law firms is safe and quick data sharing with their clients or other relevant bodies. Traditional communication channels such as emails, mail services, or social media communication tools are easy targets for hackers. An electronic data room helps lawyers add people to the data rooms and share documents with them in a controlled environment.
Similarly, users can be immediately notified about updates related to case proceedings, and data room communication tools make sure that everyone in the data room can communicate whenever needed. Some VDR vendors offer customizable NDA templates that can be used to control unauthorized use of data.
When it comes to data rooms for law firms, iDeals is one of the best virtual data room providers. iDeals VDRs have a massive legal forms library, electronic signature feature, and bankruptcy case management tools.
Final words
With the changing market requirements, data room providers were quick to respond. Data rooms were traditionally used for M&As and simple data storage or sharing. But now, there are customized services for litigation, real estate, fundraising, joint ventures, clinical trials, and due diligence.
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