A virtual dataroom (VDR) is an application that was built for secure document sharing and due-diligence. This is different from consumer-oriented file-sharing applications such as Dropbox or Google Drive that aren’t designed for business use cases requiring increased security and compliance.

M&A – When a company is considering an acquisition or needs to disclose sensitive information to potential buyers, VDRs provide a seamless method to grant access and keep track of activities. A VDR that is equipped with extensive activity tracking allows administrators to observe, for instance, who has accessed files, and the date they were used. This ensures that confidential files cannot be viewed without permission. In addition, if a deal does not close, the capability to revoke access immediately is crucial.

Private Equity & Venture Capital – Raising capital can often require multiple rounds of sophisticated investors. A VDR online platform allows businesses to securely exchange financial documents and records as well as keeping the information under control.

A VDR also supports the electronic signature of contracts as well as other forms of documentation. This means that you don’t have to send draft documents back and forth via email or through an external eSign provider, which can create additional security risks. Modern VDRs can also provide granular security options for files and folders. They can also use real-time labeling, classification labels, vectors and permissions to limit access by unauthorized individuals. They can also generate reports and analytics for admins to keep tabs on the activity of data.