Virtual data rooms (VDRs) have secure file-sharing capabilities but offer much more than typical file-sharing services. A data room is built to facilitate business mergers and acquisitions, technology licensing, biopharmaceutical partnering, bankruptcy, and other complex processes. Here’s an overview of VDRs, secure file sharing, and the main differences between the two document-sharing services:
What Is a Virtual Data Room?
A virtual data room or deal room is a secure cloud-based data repository that allows businesses to share sensitive files. VDRs offer a secure, controllable, permission-based environment that supports multi-party, asset-centric business transactions. Virtual data rooms allow the administrators to upload documents and specify permissions policies to govern how users utilize the information. VDRs are mostly used in mergers and acquisitions where the seller provides sensitive information to counterparties. The service is often provided on a SaaS model.
What Is Secure File Sharing?
Secure file sharing or document sharing can refer to any service that allows users to create and share files. A virtual deal room offers file sharing but is distinguished from conventional document-sharing services through its robust features and applications. Standard document-sharing services automatically synchronize across your devices and allow multiple user access and edits. You can also access cloud files quickly and collaborate with others but have little support for complex business processes.
What Is the Difference?
VDR software offers a solution for more demanding business processes that can’t be facilitated efficiently using regular file-sharing platforms. The features, workflow, and APIs are optimized for mergers and acquisitions, investor communications, boardroom meetings, and other business processes. Conventional document-sharing services are tailored toward personal use and small business internal communications. Below are five key distinctions between a virtual deal room and regular secure file-sharing services:
1. Security Capabilities
Deal rooms and file-sharing platforms both use standard encryptions, but VDRs offer extended security capabilities for businesses. A data room protects information from hackers, as well as third parties you knowingly share the files with. Virtual data room providers deploy the VDR software on computers that aren’t administered by your IT department. The service also features added security layers, including TSL encryptions, IP restrictions, private cloud solutions, user-based permissions, and two-factor authentications.
2. Feature Variation
VDRs and regular file-sharing applications offer instant access, one-click sharing, restricted sharing, and many other shared features. Virtual data room providers include more specific features like user-based permissions to control access levels to individual documents. VDRs also have audit trails to track logins, uploads, downloads, and deletions. Other VDR features include custom NDAs and SLAs, file approvals, versioning, locking, and dynamic watermarking. You can also set expiry dates, passwords, and file permissions to control external sharing.
3. App Integrations
Virtual deal room users can integrate secure file-sharing services for seamless file management. VDR providers offer robust APIs and connectors to enable integrations with outside platforms. Deal rooms also provide comprehensive 24/7 customer support with fast response times to prevent delays. Regular document-sharing platforms only allow limited integrations, so you can’t integrate a deal room API into the service.
4. Organizational Efficiency
Virtual deal rooms have superior organization features with separation, sorting orders, and search filters. Leading VDR software offers robust digital asset management featuring workflow automation tools like built-in Q&A, e-signatures, and messaging. The software automatically allocates, enumerates, and converts uploaded files for efficient searches and use. You can access PDFs, text, and image files separately and have instant access to onboarding support. The VDR software provider can also help you set up the room for better efficiency.
5. Function Distinctions
Deal rooms involve sharing financial statements, contracts, legal material, insurance documents, corporate records, employee details, and government compliance proofs. VDR platforms are built for mergers, tech licensing, fundraising, partnerships, syndicated loans, investor briefings, and other business processes. Users can also get notifications for file changes, comments, version uploads, and approvals. Regular file-sharing services involve creating and sharing images, meeting minutes, memos, presentations, sales pitches, and marketing proposals.
Use Secure Virtual Data Rooms
Virtual deal rooms offer advanced content protection features, including granular access to digital files. You can block unauthorized file sharing and editing and protect intellectual property with watermarks. The software also provides APIs to help you use free file-sharing services to give you the best of both worlds. Contact a trusted VDR provider today to learn more about virtual data rooms and how they can support your process.
