Every M&A transaction faces unique challenges, depending on the nature of the transaction itself, participants involved and where they are located, budget, or who has access to what documentation to name just a few. And just as every deal is different, there is a marketplace full of virtual data room providers claiming to make the process easier.
The use of virtual data rooms increases every year, and while North America remains the biggest user of the technology, Europe and Asia are rapidly catching up. The growth is driven mainly by a few key factors, which all fit comfortably under the heading of due diligence. Data room technology offers the ability to reach across borders. It speeds up processes by reducing time frames and frustrations of document access during high-level deals, and gives peace of mind to all parties involved.
Why should you pay for a Virtual Data Room when file sharing platforms as Dropbox or Box.net or Google Docs are free? When it comes to sharing important confidential documents, it’s important to be able to distinguish between these different online services. The short answer is that they were built for different purposes. VDR’s have advanced capabilities tailored for secure transactional work, while consumer type services cater to the common user. If you are managing an enterprise, you would be unlikely to want to leave information on something that is designed for individuals. Here, we examine the factors you should consider when choosing between using Dropbox or a virtual data room:
Built with a higher level of security required to run an enterprise, there is good reason why virtual data rooms are used by banks and government agencies. Virtual Datarooms main foundation is security while consumer based services are based on ease of use and mass adoption with security many times as an afterthought. As a matter of fact, there have been significant high profile security breaches in most of the consumer focused companies.
Virtual data rooms allow you to remotely control users rights to documents after they have been uploaded; so that if a deal ends or a user is removed from a project, you can lock down access to the document he has saved. In addition to other basic security measures, some data rooms also let users add a personalized watermark to their documents and block the “print screen” key for viewers.
Physical data rooms are quickly being replaced by virtual data rooms, partly because of the complex procedures that are necessary to protect the information held in these rooms. Having confidential deal information in a specific location means that the parties in a deal need to travel to and from the location each time they view documents, which also results in high costs associated with transport, accommodation, premises and security. Another complex issue is the on-site management of the venue, which needs to be restricted to only those who are essential to the due diligence process. Use of Virtual Data Rooms has considerably evolved over the years over its Physical counterpart in many ways.
Let’s take a closer look at the procedures involved in using a physical data room.
These days, it’s an exception rather than the rule to find companies using paper document storage instead of a professional and more secure platforms like a virtual data room for their confidential information. In most countries, building a data room was once a complex process.Thanks to the hard work of players in the industry and the quality service offered by many providers, data rooms have become accessible to many more clients.
Whether you’re an expert deal maker with years of experience or you’re setting up your very first data room, you’ll want to avoid these 5 common mistakes.
A virtual data room provider´s perspective about scanning is very different to general public. We think it is an exciting topic!
We started offering virtual data room services 12 years ago. Back then, most of our datarooms projects included big scanning jobs. Right now most of our projects are all digital and although we still do a bit of scanning, most documents come to us digitized. In many cases, our clients and partners ask for advice regarding scanning.
I was invited last week to share with a group of MBA students our perspectives on the history of Virtual Data Rooms. This is a brief compilation of what I shared with them on my experience in this business line. Experience, you see, is a precious commodity because someone was present, involved and personally learned from an event – and hence can share their story first hand to let people relate to it in much better way.
Starting from the humble beginnings when the world’s first VDR was created and used for Debt Underwriting, the industry has grown significantly. VDRs have become the norm in almost all transactions that are in the due diligence phase substituing Physical Data Rooms. But back then, it was a whole different story as the people were reluctant to shift from traditional Datarooms to a Online one. Lets have a look at some of the challeneges that the industry faced when it was nascent .
Prior to my role as a Virtual Data Room Consultant, I had the opportunity to work on a number of M&A transactions which required a significant amount of data sharing between parties. This was the time when physical Data rooms were still the first option for most of the transactions and virtual datarooms were still very rare. The first time we used a virtual data room, the costs went significantly over our initial estimates. We were very surprised with how quickly the total fee charged by the dataroom provider ballooned to a cost that we were uncomfortable with.
Virtual Data Rooms have come a long way from their main purpose as a secure platform for confidential document sharing. Data Rooms are now moving beyond the transaction space, a shift fuelled by the wide spread acceptence in the finance/IT world. In IT-speak, migration is the process of changing from one platform or operating environment to another. It usually involves the transfer of large quantities of data, and typically happens when your server or storage becomes insufficient to meet your needs.
If you’ve been storing all your confidential company information on an internal server that’s rapidly becoming too small, this would be a good time to migrate over to a cloud storage platform such as a virtual data room.