A data room, also known as a virtual venue dfin vdr data room (VDR) is a secure storage space for sharing confidential information. Data rooms are the modern equivalent of physical rooms in which hard copies of documents were kept to be reviewed in negotiations to buy or sell. They are often used to aid in the process of legal and economic due diligence.
All sizes of businesses use them, but SMEs with team members across the globe find them especially useful. In the past, larger enterprises might have used more expensive in-house solutions, but as VDRs continue to improve and become more accessible, they are being used by SMEs too.
When to use a data room
A data room can be useful at any time in the business cycle, but it is typically utilized during M&A processes or other sensitive processes that require confidentiality. For example venture capitalists typically want to look over contracts and other documents of a startup prior to closing an investment, which can be completed in an online data room that has access granted to lawyers and other parties.
A data room that is prepared can aid a company in preparing for due-diligence by uploading documentation early and making it accessible before any third parties are invited into. Some data rooms have redaction tools that can be used to quickly and efficiently remove sensitive information prior to sharing documents. This lowers the possibility of making a mistake which could affect any deal.
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