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Virtual data rooms function as a secure storage space to store secure, manage and distribute documents during transactions. While all VDR firms provide the basics they are not all specialized in particular transactions or industries. They also typically offer a variety of extra functions that make the software more efficient as well as easier to use.

VDRs are also a great way to raise funding by allowing potential investors to see the financials of a company. This increases the chance of a new venture being successful. They are particularly beneficial in due diligence, when every detail about a business needs to be viewed.

When shopping for a VDR, M&A teams should take into consideration the amount of storage they need and the amount of data each party will be able to access through the digital workspace. They should also investigate the settings for permissions on a VDR, for example, the ability to restrict files to “view only” as well as specific user roles.

Other features to be looking for include drag-and-drop uploading, automatic indexing, and document numbering and an optical character identification tool that allows full-text searches on all uploaded documents, as well as dynamic watermarks which appear on every document when it is printed, viewed or downloaded, as well as the ability to apply custom brand colors. Certain VDRs require that all users sign a nondisclosure agreement prior to downloading any data which adds another layer of security.

The most secure VDR companies have various security certificates, including ISO 27001, SOC 1/2/3 GDPR, and HIPAA. In addition they should permit customers to modify their security levels and design an enclosure view that blacks out sections of the document to stop the taking of screenshots. They should provide support via live chat, email or phone.