To learn more about what is a virtual data room, read this article
So, what is a data room service provider? Virtual data room providers equip interest groups, firms, and corporations with a secure, online platform to upload, store, and distribute information. Some M&A data room providers may provide consulting and administrative services in conjunction with their VDR to facilitate a smoother transaction.
Here is a list of well known virtual data room service providers:
Companies no longer have to wait for documents to be delivered or run the risk of them getting “lost in the mail.” As long as there is Internet access, their cloud-based software provides firms with fast and constant accessibility. VDRs create an online rendezvous and facilitate collaboration, which prevents common pitfalls of miscommunication and things not going as planned. The crux of VDRs is their security. They help negate the likelihood of document leakage and misuse.
Best Virtual Data Rooms for M&A (Virtual Deal Rooms)
Aside from some basic functions, not all virtual data rooms are created equally. They offer a range of basic to advanced functions and may tailor to certain transactions and industries. This applies especially to due diligence and mergers and acquisitions. Some may provide necessary functionalities, storage capabilities, and consulting services to help facilitate a smooth transaction.
Here is a list of the top VDR providers for M&A:
DealRoom Deal Room
Intralinks Deal Room
Merrill Data Room
Fordata Virtual Dat Room
Securedocs Virtual Data Room
Firmex Deal Room
The Best Virtual Data Rooms for Due Diligence
Nowadays, there are many different virtual data rooms providers for due diligence out there. Each provider varies slightly due to features, pricing, support, industry niche etc. Due to the amount of virtual data room platforms available, there is definitely one that will fit your teams needs best. And if you are looking for a virtual data room specifically for due diligence there are certain key features to keep an eye out for such as requests management capabilities, drag and drop files upload, and easy documents management.
The best data rooms for due diligence are:
Free Virtual Data Rooms
VDRs can be a heavy financial investment, so it’s totally reasonable to question if there are free options out there. Unfortunately, a majority of virtual data room providers charge after a free trial period ends. However, we discovered a handful of free alternatives.
With that being said, there are a few important considerations. First, they all have storage or usage limitations. We detailed what you receive for each in the descriptions. Second, and perhaps most important, is security and advanced capabilities. At their core, all of these options offer a virtual space to collaborate and share information. Beyond that, not everyone may have the necessary safeguards to protect information or advanced and analytical features that expedite projects, deals, and due diligence.
What it really comes down to is knowing your project and needs. From there, you can discern if one of the options below will work or if you should invest in something else.
The options for free virtual data rooms are:
Data Room Providers Usage
Due to their speed, convenience, and safety, VDRs are utilized among several different fields for various purposes. Some examples include:
IT and Telecommunications
Private Equity and Venture Capital
Consulting and Advisory Services
We understand that choosing the right virtual data room provider for your firm or transaction can be taxing. To alleviate that burden, we have detailed and compared the industry’s top virtual data room providers. Now, you can close your next deal or collaborate on a project in confidence that you made the right VDR choice.
How to compare virtual data rooms and choose the right one?
Beyond the basics, different virtual data room providers may range in their functionalities, security, storage, and support. Additionally, they may employ various pricing models. All of these different variables can make comparing and choosing the best data room a bit of a headache.
What it really boils down to is being able to delineate what you need from the data room. You can sort through hundreds of virtual data room reviews online, but none may speak accurately to your project. One option that many providers offer is a free demo or trial. Utilizing these services are a great way to see whether or not it would be worth the long-term investment.
1. Compare the Functions which Virtual Data Rooms Offer
Essentially, virtual data rooms act as a secure platform to house, manage, and distribute confidential information. VDRs also have other, often customizable functionalities. These may differ on a case-by-case basis depending on the provider, the user, and the project. The key is to ensure that you choose one that is efficient, intuitive, and secure. VDRs are supposed to make workflows easier, not more complicated.
Some common functionalities of virtual data rooms include:
Digital Rights Management
Document Filtering Tools
Advanced Search within the Whole VDR
Activity Tracking and Audit Log
Drag and Drop Files
Possibility to Have Numerous Projects within One Account.
Print Screen Button Disabling
Questions and Answers (Q&A) Functionality
Microsoft Office Integration
2. Compare data room pricing and pricing models
With so many options of VDRs and providers in the market, it is hard to know how much you should pay. It’s a big decision and investment. You should not haphazardly choose a cheap virtual data room that won’t pay off in the long-run. Some virtual data room providers may lack necessary security and confidentiality safeguards. And, to make matters more complex, online data room providers often employ different pricing models. Different bases for the cost may include:
Complexity of capabilities
Extra or premium features
Amount of rooms or workspaces
Number of users and/or administrators
Additional consulting and/or administrative services
To simplify your decision-making process, we have compiled a list of questions that you should ask yourself when comparing prices:
What are the security measures required for your project and/or transaction?
On the outset, a free virtual data room may sound great. However, these free online data room providers may lack substantial security features. Thievery and breaches of data may be costly, difficult, and if not impossible to recover from. If your dealing with large amounts of confidential information like in mergers and acquisitions, the extra investment may be wise.
What is the size of your project and/or transaction?
You often have to pay above the market for VDRs that are apt for handling big data. Regarding smaller projects, it may not be cost-effective to choose a renowned VDR just because Goldman Sacs did.
How complex is your project and/or transaction?
Some VDRs charge a premium of complex or customized features whereas others lack the capability. That is why it is integral to forecast what functions you will need your VDR to perform. Otherwise, expensive, fancy features may sit at the wayside when the expense could have been avoided altogether.
Will you need extra services, i.e. consulting, training, or other support functions?
Many virtual data room providers offer additional support services to ensure a smooth transaction. These may be offered at a cost-savings when bundled with their VDR. This could be a worthy investment for smaller firms or complex transactions. These additional services help alleviate the burden of minute tasks so you can focus on your business.
3. Compare additional options available
When implementing virtual data room software for your organization or project, you don’t want to be stuck with unresourceful help. This will only further plague your processes. Luckily, many VDR providers on the market offer additional help and options so you have just what you need.
Listed here are some questions you can ask to better navigate and compare the additional options they offer:
Is there a virtual data room free trial?
Is their customer support team available 24/7/365?
Are you granted a single, dedicated company representative? Or are you waiting on hold and then tossed between reps?
Are you able to request new features post-implementation?
How comprehensive are their training and onboarding services?
4. Compare ease of use and flexibility
Virtual data rooms can be rendered useless if you can’t figure out how or have the means to use it.
Here we have detailed a few questions you can ask yourself when judging a potential VDR’s usability and flexibility:
Is the VDR available on all operating systems?
Does it have to be accessed via desktop or does it offer iOS or Android applications?
Is the interface attractive and intuitive?
Are capabilities such as invites or uploads efficient or do they require multiple steps?
Is the VDR’s uptime at least 99.95%?
5. Compare virtual data room security
Perhaps the crux of VDR’s is that they are a platform to store and transmit confidential information. Online data can be subject to thieves, hackers, and breaches. These occurrences can be detrimental to individuals and businesses alike. This means that security is priority.
Below are some questions you can ask yourself when gauging how secure a data room provider is:
How many of encryption are there for the data room?
Does the data room abide by necessary compliances?
What security certifications does the provider have?
What control features does the data room offer, i.e. advanced user settings?
Is there an option for two-factor verifications?
6. Compare data rooms to Find the Best for Your Industry
Beyond document and file management, many VDR providers offer a multitude of other, more advanced capabilities. These options can make it difficult to gauge which VDR provider will best cater to your industry and needs.
Here are some items to consider:
Many product and service-oriented firms utilize CRM applications such as Salesforce. During a transaction, these applications may house important data that you would need in your VDR. The ability to integrate with different software can bolster efficiency and save the headache of manually transmitting data. Some providers offer the same capability with other collaboration software such as Office365 and Slack.
Depending on the size of your firm, you may not need to forgo the extra dollar on storage space. Some providers may offer different packages for virtual data rooms for startups versus billion dollar M&A transactions.
Some VDRs may not have the capability to upload and support certain file extensions. Ensure to check all features before committing to a provider.
Compliance standards vary from industry to industry. Certain providers cater to specific industry standards, so check security and compliance standards carefully when choosing a VDR.
7. Compare virtual data room reviews
If you are unsure of which virtual data room provider you want to use, try looking at software review sites to read about other users’ experiences. Some of the popular virtual data room review sites include: TrustRadius
, G2 Crowd
, and Capterra
. Also, it’s important to note though that while many of the software review sites feature true and honest user feedback, some allow vendors to purchase reviews. Just be sure to do thorough research and look out for the word “Sponsored”.
Virtual Data Room Best Practices
A virtual data room may prove to be inefficient if not used properly. After spending time and capital, you want to be able to fully reap its benefits.
Detailed here are some best practices to follow so that your data room is an aid rather than a detriment:
After a large change in processes, often times individuals and firms quickly revert to old ways. Some fear change or find it easier to do things as they’ve always known. Nonetheless, it would be a waste of the implementation costs and monthly premium if your new VDR is quickly discarded.
Keep it neat
Similar to traditional file-storage, VDRs run the risk of becoming disorganized. Aimlessly uploading documents in ambiguous folders can hurt more than help. Staying up-to-date and naming items clearly will boost organization and efficiency.
Let in who you can trust
If you’re using a virtual data room, chances are it is housing confidential information. Be sure to only give trustworthy individuals access and take advantage of advanced user permissions.
Virtual Data Room Benefits for Your Business
Imagine walking into a workspace that isn’t pervaded with a city of disorganized file cabinets. Information can be transmitted at the blink of an eye -- anytime, anywhere. Regardless of your industry, market, or business model, a virtual data room can improve productivity and efficiency. VDRs improve workflows for everyday operations and special projects such as raising funds from potential investors. VDRs equip you with an online platform to not only store information, but also communicate, delegate tasks, and track project progress. No other software can offer the same combination of collaboration and security.
Detailed is an even more comprehensive list of benefits:
Secure data storage
Fast data organization and transmission
Achieve better control over information
24/7 accessibility anywhere with an internet connection
Glean helpful feedback and analytics
Better accountability measures
Efficient, non siloed collaboration
Get deals and projects done faster