The Ultimate Guide to Data Rooms and How to Maximize Efficiency with

Virtual data rooms remained the unsung heroes of corporate finance and M&As for years, but the global business fraternity is recognizing the importance of this amazing data management tool. Be it investment banking, private equity ventures, fundraising, or federal authorities, data room software serves almost every private and public sector organization.

Here is an ultimate guide to virtual data room software — what is it used for? Who can use online data room software? What are its benefits? Let’s find out!

What is a virtual data room?

A virtual data room (aka online or electronic data room) is an online data management repository globally used for safer and controlled data sharing, management, and distribution.

In broader terms, an electronic data room is a complete business solution that addresses multiple administrative operations, including data management, corporate communication, and project management.

Modern-day data room services have shifted to customized solutions for different processes and industries according to their unique needs and challenges. There are tailor-made data room solutions for lawyers, corporate boards, due diligence, M&As (buy-side and sell-side), healthcare, etc.

Why virtual data rooms?

There are many other free online tools for data storage; why should businesses turn to data room technology?

A virtual data room is immensely different from cloud-storage tools in different ways. First, VDR solutions are hosted by certified data room vendors. These certifications include ISO, FINRA, FISMA, SOC, GDPR, HIPAA, etc. These certifications are regulated by global, regional, and local regulatory bodies. It is hard to find a free online data storage tool with all these certifications.

Second, online data rooms provide built-in solutions for project or deal management and online communication. For example, a high-end virtual data room has a task manager, meeting agenda builder, minutes builder, private chat messenger, and activity management tools.

Third, virtual data rooms’ security is way stronger as compared to free online tools. VDRs employ advanced cyber protection features like fence-view mode, dynamic watermarks, self-destructive documents, device purging, and access restrictions.

Who can use virtual data room software?

How did virtual data rooms gain unprecedented popularity in a very short span of time? Yes, they are super secure and cost-effective. But, the best thing about them is they are universal solutions that every business, no matter the size, can use as per their needs, says Gilbert Waters, Co-founder and marketing specialist at, an expert data room comparison and review website.

As mentioned by Gilbert Waters, data rooms are universal solutions that every business can use as per their needs. Here are the top consumers and uses of virtual data room technology:

  • Healthcare sector — hospitals, public healthcare institutes, pharmaceutical companies, R&D firms, medical professionals, medical startups, biotech licensing, clinical trials, fundraising, etc
  • Financial sector — investment banks, consultancy firms, private equities, and auditors
  • Oil and energy sector
  • Corporate sector — board communications, data management, joint ventures, strategic partnerships, capital raising, and external communication
  • Legal industry
  • IT and telecommunication sector
  • Charities, clubs, associations, and nonprofit organizations

Apart from that, virtual data rooms are highly popular in SMEs. What’s more, the North American region stands as a top data room consumer.

Benefits of data room software for businesses

The following are worth-mentioning benefits of data rooms.

Remote data access

The hybrid work model is catching fire in business spheres. Not only businesses but professionals also prefer working remotely as it saves costs for employers and employees. Virtual data rooms are remotely accessible document repositories that allow users to access corporate data from anywhere, anytime.

Improved data security

Remotely accessible repositories have their perks, but making them secure is a herculean task for businesses. Accidental data loss or data breaches prove to be costly, and businesses can lose their competitive advantage or even the license to conduct business.

Online data room software is a stress reliever for business owners. It employs the latest and strongest security measures to safeguard business data from internal and external dangers. Not many data management solutions can provide 100% control over business data, but a VDR does.

Proptip: when you compare virtual data rooms, always ensure they have basic security features like two-step verification, digital watermarks, document access controls, view-only mode, and device purging.

Efficient business transactions

Electronic data room software is a top preference of dealmakers and corporate leadership during external business transactions. It provides a central platform during financial transactions like mergers, acquisitions, divestitures, asset trading, etc.

Investors, stakeholders, partners, arbitrators, consultants, board members, legal advisors, and other concerned parties can access and share data, conduct meetings and live Q&A sessions, sign documents, and manage assigned tasks at a single platform — VDR.

Final words

Data room software is a certified corporate data management solution that allows businesses to safely and cost-effectively store, share, and distribute data internally and externally. Some of the best virtual data room providers include iDeals, SecureDocs, Merrill, Ansarada, and Digify.

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