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What is a Virtual Data Room?

Virtual data rooms are a practical method to store and distribute confidential documents. They are utilized in M&A transactions as well as loan syndication, venture capital and private equity transactions as well as other corporate collaborations that require the sharing of sensitive data with external parties. They provide secure storage of intellectual property, which prevents it from being stolen.

While certain VDR providers cater to specific industries or types of transactions they all offer a complete set of security features that are typically needed for any kind of data handling. The most crucial ones are granular access rights for access, multi-factor authentication, document watermarking and fence view which prevents screenshots.

VDRs also provide a range of file processing functions that aren’t usually accessible through standard file-sharing services. For example, they can convert text written by hand anchor or typed into searchable data, or scan paper-based documents into digital files, and allow users to extract specific information from PDFs. They can also make files easier to comprehend by converting them into a variety of formats that will meet the needs of the user.

Before choosing a virtual data room provider, check its security and compliance credentials. Choose a company that has at minimum ISO 27001, SOC 1/2/3 and GDPR. You can also verify the reputation of the provider on review sites for software such as Capterra or TrustRadius. This will provide you with an understanding of the company’s capabilities and customer experience. Moreover, it will assist you in determining whether they are able to handle your data volume and complexity.