Did you know that so far in 2019, hundreds of millions of citizens have had their data compromised?
Data is extremely valuable to both companies and hackers, and the consequences of data breaches are far reaching: from negative PR, to loss of revenue, to fees associated with legalities of data breaches...compromised data can wreak havoc on a company.
Keeping data safe is of the utmost importance when trying to maximize synergies and grow businesses, but what is the best way to safeguard data?
Virtual data rooms (VDRs) can be a safe and effective way to store and share sensitive data. In fact, VDRs are said to lower the risk of information theft by a third party.
What are some of the key considerations when selecting the right VDR provider?
Of utmost importance is taking the time to thoughtfully investigate a VDR provider’s security certifications and features, which will help protect data while simultaneously allowing work to be conducted more efficiently around the clock.
A virtual data room (VDR) is a cloud based storage system, and virtual data room security relates to the certifications, user features, and encryption protocols that work to keep this cloud of data safe.
In general, VDRs are considered extremely secure. One of the top indicators of a virtual data room provider’s security is the type of certification it boasts. ISO 27081 is considered the premiere security choice for cloud storage systems.
ISO is the largest developer of international standards, and therefore, ISO certification is the most widely accepted certification in the world. A VDR that is ISO compliant means it follows the guidelines set forth to protect Personally Identifiable Information (PII) in storage clouds.
More specifically, VDRs allow for the secure storage of information, secure file sharing with clients, and secure collaboration on files. Here are more details:
VDRs allow for secure and efficient storage of information. In fact, according to entrepreneur.com “virtual data rooms have almost the same grade of security as high-level financial agencies like banks. With a VDR, you can be sure that your private information will not be affected by natural and manmade disasters, fire or flood.”
Virtual data rooms allow for easy, centralized, and secure file sharing. This makes it a perfect tool for deal-making, as well as for real-estate, finance, legal services, and all other data sensitive lines of business. The central dashboard allows the administrator to determine who can access specific documents in the room. Room specific additional security features (which we will discuss below) also make this file sharing extremely easy and secure.
VDRs, especially those with more project management features, allow for increased collaboration due to heightened visibility and 24/7 access to files. Undoubtedly, real-time transparency and communication are invaluable in today’s fast-paced business world.
Storing and sharing data in a VDR is actually much safer than simply storing files on computers or sharing on a company server.
This is because the top VDR providers have advanced security certifications as well as other security related features. Below we discuss these security features and certifications.
While security is of the utmost importance, the following are additional considerations to help you weed through the jungle of VDR providers for investment banking, legal, private equity and more and identify a secure VDR that will truly support your business goals and needs:
Looking inward before turning outward to providers is essential. Failure to clearly define your company’s unique needs and abilities will make your VDR shopping much more cumbersome and can result in lost time and value for your business. The following questions and points of consideration provide a solid place to begin:
VDR features tend to fall into the following categories:
Similar to defining your needs and abilities before you begin shopping, setting a ballpark budget will also allow you to narrow your search and be more efficient. Most commonly, VDR pricing is based on the following:
Now that you have established your needs and price point, in order to effectively compare which virtual data rooms meet these criteria, you can use one of the following tools:
Reading reviews is essential, but proceed with caution: many VDR providers pay for “fake reviews.” For instance, writing peppered with spelling and grammatical errors is one sign the review is fake. Another red flag is numerous five star reviews (which are very rare, unless the company has paid for them).
With these tips in mind, to begin your review research, start by searching “Provider name + Reviews” in Google. Next, consider the following websites, which are considered credible in the industry (although we cannot guarantee that a fake review will not appear from time to time):
After you have been able to pinpoint a few well-reviewed M&A virtual data rooms that meet your needs, you must interact with the providers and their websites.
In speaking with the providers’ support teams, you will want to consider both the knowledge and helpfulness of the support staff as well as their response times. When considering the providers’ websites, keep in mind that these sites are in a sense previews of the product..
Specifically, how intuitive the website is often says something about how intuitive the product will be. Other considerations include: is the interface modern, is the site visually pleasing, and does the website offer any free materials that would be useful for your company and its users?
Building off of our previous step, it is imperative that you check the security page of the VDR providers’ websites.
An obvious last step is testing the VDR via free trial offers. Just as you would not buy a car you didn’t first test drive, don’t put your business’ data in the hands of a VDR you don’t test.
As you work through the trial, continue to make note of the VDR’s features and ease of use. It will be important for multiple members of your team to also test the virtual data room to see if it is a good fit for users of all technological skill levels.
VDRs are the wave of the present and future when it comes to sharing and storing data. They can be utilized for all data sensitive fields and can improve workflow and efficiency. With more and more VDR providers popping up, companies need to be informed as they shop this crowded market.
Furthermore, companies must be especially wary of free cloud based storage systems. While these systems may initially seem like the easy and cost effective choice, all it takes is for one email account to become compromised and the entire company's accounts become vulnerable to attack.
Similarly, when a server is hacked, all of the documents and data that have been on the server are now at risk. It is crucial for companies to be diligent and thoughtful in their investigations and selections of VDRs to assure the security of their data and sensitive information and, ultimately, to assure their business success.