The role of virtual data rooms in business confidentiality

Every business has its modus operandi which refers to how deals and transactions are carried out. In the same manner, there are vital and confidential data that are generated from each deal process. These documents, be it financial, legal or administrative data are what constitute the core of any business and they demand being kept safe from third parties.

Over time, businesses have adopted the use of physical data rooms such as having a physical room where paper documents are stored. At another time, it became the case of saving vital documents on flash drives or USB devices but all these could still fall into the wrong hands. In other words, the physical data room had its demerits and limitations. Which is why virtual data rooms can offer greater confidentiality.

Ever since the advent of virtual data rooms such as DealRoom, Box and the likes, business confidentiality has heightened and vital business data are now being securely preserved. You must be wondering how this came to be. It all comes down to the beautiful technology behind the design of the virtual data rooms.

A virtual data room serves as an online repository that allows for high security and preservation of sensitive business data. The fact that all your business data are stored in a virtual data room that cannot be accessed like the physical data room makes the VDR reliable and efficient. In the corporate world today, many wise business owners have made the right choice of switching to the virtual data room for keeping their data safe. This ensures maximum data security as the virtual data room is more secure and protected than the other conventional methods that were previously accepted. The features and characteristics that the virtual data rooms possess make them suitable for effective data security and prevention from potential cyber-attacks amongst many other benefits.

Having realized the fatal consequences of a successful hack on your business data, the use of a virtual data room is therefore encouraged. It will also be useful for you to familiarize yourself with m&a playbooks.

VDRs play essential roles in ensuring confidentiality in your business. Its use cuts across all processes involved in business transactions such as Mergers and Acquisitions (M&A), Initial Public Offerings (IPOs), Intellectual Property (IP), due diligence and the likes.

Roles of virtual data rooms in business confidentiality

Virtual data rooms (VDRs) have exquisite features that make them suitable for use in safeguarding confidential business data. These form the basis of their important roles in maintaining business confidentiality. The following are some of the numerous applications of virtual data rooms in business:

1. Sharing confidential documents with clients and investors

In the line of confidentiality as it is appropriate, each document has targeted recipients during any transaction or deal. If such documents should be accessed by authorized persons, it can be said to be a data leak. Virtual data rooms have been so designed to ensure that confidential documents can be shared only with the intended clients or prospective investors. The online data room is secure and well protected such that there can never be any case of unauthorized access to your business documents. As the VDR administrator, you have outright access control which allows you to control who views or has access to data stored in your data room.

2. Data encryption and safe storage

Business data remains the core and focal point of any business. Information and details relating to your legal, financial and administrative sections matter a whole lot to the sustenance of your business. This is where a virtual data room serves the purpose of encrypting all data stored in it such that they cannot be affected by any cyber attacks. On this ground, your business data stay safe and confidential.

3. Faster transaction timeframes and decision making

Businesses are now able to conclude business deals and transactions such as due diligence in mergers and acquisitions (M&A) in a very short time. With the help of virtual data rooms, both transacting parties will be able to assess the confidential data and documents involved in the deal safely on the CDR platform. This has ensured that business deals are done speedily as it also ensures that agreements are reached in no time, whilst keeping those vital documents safe in the online data room.

4. Download protection and document watermarking

Virtual data rooms provide effective data protection that is not matched by any other data storage medium. The VDR gives the administrator absolute control to decide whether documents can be downloaded or printed from the online data room or not. In other words, your data cannot be downloaded unless you authorize it. In the same vein, any downloaded documents from your data room will have your business details as a watermark on them. This will make it possible for you to trace all documents that are downloaded from your data room. 

5. Audit trail reporting

The virtual data room also has an exciting feature that furthers adds to its confidentiality of data. By using the VDR, you will be able to keep tabs on what happens in the data room such as knowing who has viewed which documents in your data room. Other important details such as the exact time the documents were viewed and also the number of views will be available to you.


VDRs remains the perfect platform for you to ensure that your business data stay confidential and secure. All vital data will be encrypted and well protected, coupled with restricted access such that only authorized individuals will be granted permission to access such confidential data.

Lori Wade is a writer who is interested in a wide range of spheres from business to entrepreneurship and new technologies. If you are interested in M&A or virtual data room industry, you can find her on LinkedIn.