In today’s business landscape, due diligence is not an occasional task. Situations like mergers and acquisitions happen more frequently in our fast-paced markets, and companies need to be quick off the mark whenever they arise.
What’s more, due diligence has moved way beyond M&As. No one enjoys thinking about compliance and tax audits, but they occur more often than anyone would like. Investment fundraising initiatives, opportunities for business partnerships and joint ventures, and simply onboarding new clients and suppliers all demand some form of due diligence.
Companies that take too long to deliver can expect to get left behind.
That’s why smarter businesses are increasingly streamlining due diligence with a virtual data room. Virtual data rooms (VDRs) are cloud-hosted archives for businesses to store and share important business documentation. They have many benefits, including helping companies to organize their files, but the biggest advantage of using a virtual data room is the increased security that doesn’t compromise on accessibility.
Due diligence documents are often the most valuable assets for a business, so no one wants to risk them getting mislaid, stolen, or even seen by the wrong eyes. Let’s take a closer look at benefits like secure sharing, access controls, and damage protection, and the VDR features that prevent unauthorized copies and preserve anonymous viewing. Along the way, we’ll make the case for some of the top reasons why virtual data rooms are the most secure way to enable due diligence.
Virtual data rooms keep your documents in one secure location
The old approach to due diligence involved sharing physical copies of vital business documents. Sending them to a third party meant using unreliable snail mail, risking a courier, or trusting them to email, each of which opens up the possibility that unscrupulous individuals could access documentation.
Many companies were so concerned that their files could go missing or be copied in transit, they refused to let them leave the building. That’s how the idea of a (non-virtual) data room originally came to be.
Virtual data rooms changed all that. Each company stores its critical documentation on its own VDRs, granting access to specified people at the other party. There’s no need to send any documentation, either physically or electronically, reducing the chances that papers or files could be lost, stolen, or mislaid. All the time, the contents of the VDR are protected by powerful access controls and strong encryption that meets advanced data compliance regulations.
Virtual data rooms preserve documents from damage
Physical documents are incredibly vulnerable to damage. It’s alarmingly easy for someone to knock a cup of coffee over on top of a stack of critical files, or for papers to get ripped, stained, or fade over time.
Using a VDR helps preserve the physical originals from harm. There’s no way to spill coffee on a virtual archive. Because a VDR is cloud-hosted, you don’t even need to worry that someone might damage the company server or a power cut could block access.
VDRs safeguard the physical integrity and readability of due diligence files.
Virtual data rooms prevent unauthorized access
Worthy VDRs come with impressive access controls. You can fine-tune them in a number of ways, choosing not just who can access the VDR, but also permitting people to view, comment, or download files, selecting exactly which documents each individual can access, and setting time limits so that no one can come back in a year’s time to peek at documents without your knowledge.
One added level of security offered by virtual data rooms is the ability to grant permissions on an individual and even an anonymous level. Unlike a shared document, only the administrator knows who has access to each file. This way, security remains high even when multiple parties are reading the same files at the same time.
This granular aspect of VDR permissions prevents anyone from seizing the moment to snoop around reading other files, the way they could in a physical data room. You might choose to give the CEO of another company access to certain files that you restrict from their CFO, or allow the head of finance to read different files to those you share with the CISO. With VDRs, you can set access at any level you like.
Virtual data rooms protect documents from illegal copying
When you try to share documents electronically, you only have a limited ability to stop others from making copies without your permission. Once documents are duplicated, there’s no telling how far your trade secrets, intellectual property and sensitive information will spread.
In some high-stakes due diligence situations, you might even fear that someone could take secret photocopies or photographs of your physical documents.
VDRs help guard against these scenarios with extra layers of protection that include watermarks and web fencing. These high-level security features make it close to impossible for anyone to carry out a copy and paste attack or print out sensitive information without your knowledge.
Virtual data rooms deliver peace of mind for due diligence
Due diligence can be a nerve-racking experience, thanks to the pressure of finding all your documents in time, and anxiety over keeping them secure and undamaged throughout the due diligence process. By keeping your documents in a single secure location with strong access controls, virtual data rooms protect due diligence files from physical damage, unauthorized access, and illegal copying, with the added benefits of granular permissions that enable total anonymity for all interested parties.
With these features, virtual data rooms deliver peace of mind for companies at every stage of the due diligence process.
