If your business is just starting out, and you’re looking for a good & intuitive virtual data room to hold all of your secure transactions, it makes sense that you would look for the most cost-effective VDR to suit your needs. As a new startup business, your needs may not be as extensive as a much larger corporation, and you might be on a tighter budget due to startup costs.
Cheap or free virtual data room providers may not be the budget-friendly choice you want to make. Choosing the right VDR for your business's current and future goals is ideal, no matter the cost. You want something you can grow with and that has all of the features you want and need.
Google Drive and DropBox are both two inexpensive or free file sharing software programs that can have its users sharing information in real time online through the cloud. On Google documents, you’re able to leave comments and tag them to exact spots on the page for others to see. For personal use, these programs and the capabilities that they offer are really great. For businesses, not so much.
When a business has important data that they need to keep secure, using publicly accessible software share programs is an invitation to hackers to come and take it. Unfortunately, Google Drive and DropBox, do not offer the security features you need to do your business in a secured location. Paid VDR services often carry a much more substantial amount of security to protect you and your clients from any data breaches.
This is an especially important feature to have if you are in an M&A business because the documents shared during transactions are confidential and sensitive.
A VDR can provide a safe way for all parties to review and exchange information as they engage in negotiations and try to finalize deals. As VDRs become increasingly popular, developers are constantly seeking more ways to make them even more secure and sophisticated.
Even worse, when you use a free software share program, or a cheap VDR, you run the risk of having horrible customer service. What if there comes a time when you are in need of customer support? If you are using free or cheap software, you may have to write an email and wait a few days for a response.
When you use a larger profiled VDR program, you are assigned a customer service manager who oversees you and helps out every time you call. This alone is worth a great deal because you can work safely and confidently knowing that if you ever need something, someone is always available to help.
While virtual data rooms are a step up from free software share programs, not all VDRs are created equally. Each one is made to cater to a different demographic or business type. Not all of them will provide the features that you are looking for and/or need.
There is a huge difference between data room providers. You want to make sure they focus on security, efficiency and are easy to use. You want to make sure that the program is easy enough to use and that the training time is minimal. It should be so efficient that it can do everything for you, from role management to live comments being displayed between users. If you can do your entire transaction from start to finish in one data room, that’s great!
Box is a low-cost VDR option that is slightly better than a standard file sharing software program like DropBox. Box can be a good option for those with a smaller budget, however, there is a lack of security features, especially compared to higher profiled VDR programs. Due to this, Box is not a great option for large stake business transactions.
Another cheap VDR program is called Dotloop. While it does offer collaboration, auditing and data storage management, is it not a good option for managing M&A deals and transactions. Dotloop lacks data protection and due diligence management. It is much better for geared towards agents and real estate brokers.
This VDR offers 24/7 customer service, due diligence management, and data protection, it still isn’t perfect for an M&A company. The Clinked software misses completely with not being capable of handling role-based permissions or data storage management.
Koofr is headquartered in Slovenia, and is another inexpensive virtual data room software provider. And they offer up to 2 GB of free storage. One reason companies chose Koofr, is because of their ability to integrate with other cloud storage sites. Another reason is that the plan, clean interface makes it easy for users to learn. Unfortunately, Koofr does not offer collaboration features, and lacks features tailed to M&A and due diligence such as audit logs, watermarking, and analytics. They also have minimal customer service support available.
Ftopia is a Paris based company and is used as a project repository, FTP server, and secure file sharing server. Ftopia offers up to 10 users, 3 rooms, and 5 GB, for free. They offer the most advanced features compared to other free VDRs including custom branding, permissions, collaboration, and audibility. In terms of security, Ftopia has data encryption, intrusion prevention, automatic data redundancy, access-rights management, and SAS 70 Type II-certified protection. However, this VDR provider isn’t designed specifically for M&A or due diligence.
1. High quality VDRs come with more than just a basic security and data sharing program. They also have the ability to create meaningful analytics using the information you provided. This helps you to see pitfalls and the more profitable areas of the business, allowing you to target them and fix or exploit for maximum profitability.
2. Another benefit of using a high quality VDR is being able to track document usage. When doing a deal, it's great to be in control of the documents and viewing permissions, but it’s even better when you can see exactly what documents your clients are looking at. This helps you to get a better feel for what their interests are and can help you to better cater the deals to them. Allowing you to be much more efficient and close the deal faster.
3. Requests or QA feature
Virtual data rooms that are designed to help M&A due diligence typically have a QA or Requests feature. This feature helps teams manage due diligence requests. Advanced requests features completely eliminate the need for Excel trackers, which immensely streamlines the due diligence process.
When choosing your VDR provider, make sure that you don’t simply choose the cheapest option. Look for a company that can provide you with everything you need. Choosing a provider that can help with your secured transactions, make the process more efficient and allow you to close deals faster is worth the financial investment.
Learn more about how our virtual data room software is transforming the M&A process by contacting us today.