In the world of finance and business deals, virtual data rooms or VDRs have become standard while conducting large transactions such as mergers and acquisitions. During a merger and acquisition deal, the due diligence process mandates that numerous secure documents and pieces of sensitive information be shared between entities in order to even consider an offer. Using a VDR allows stakeholders involved to safely view confidential information on an online platform. As the global economy and markets shift, merger, and acquisition activity in the business industry has been on the rise in recent years. The process to complete these deals can take months, even years, and could prolong the need to share documents. Here’s a look at the importance of managing document sharing during this transitional period.

Managing Document Sharing for Mergers and Acquisitions

Online File Sharing Services

You may be thinking that your online file sharing service already allows your company to securely share files and avoid data loss. While this might be a way to share files, it’s not a full-fledged solution. Without an administrator being able to set permissions on files, access to confidential data could be compromised. There’s no way to set limits on who can view a document and if they can do things like print the file. \

Another problem with using a standard document sharing solution is the way that these programs interact with users’ computers. Some allow documents to be downloaded to a folder on the user’s hard drive, synchronizing them in the background. Even if a user name and password are required, some sensitive files could be stored on other hard drives without any restrictions whatsoever. Once these documents leave your control, you have lost digital rights management. Sensitive documents could be altered, printed, or shared without your knowledge.

Virtual Data Rooms

Secure document sharing for M&A processes can best be handled through a secure virtual data room service. A virtual data room is a secure online dropbox used to store and exchange confidential information during various business transactions. Sometimes referred to as virtual deal rooms, these dropbox style rooms were initially conceived in the early 2000s when online file sharing and storage became the norm. Since then, virtual data rooms have expanded into other industries and now are used for things such as housing intellectual property, and other asset management. VDRs place an emphasis on security and real-time information management. Traditionally, in the high-stakes world of M&A and due diligence, secure documents were kept in physical data rooms. These rooms allowed access to hard copies of all required documents to interested parties. As a result of shifting business trends and technology demands, the VDR has replaced physical data rooms as a primary means of disclosing confidential information. Secure online data rooms allow for documents such as financial statements and employee information to be kept in a safe space beyond a corporate firewall.

Protection For Sensitive Data

A virtual data room service provides online dropbox services in many respects but with advanced security features. These VDRs are best suited to protect a company’s financial transactions, intellectual property, personnel records, and other sensitive merger and acquisition documents. While different VDRs have unique features, the majority offer numerous standard advanced security features. Data encryption, data backups, audit logs, and dynamic watermarks are all provided to prevent data breaches and hackers, unauthorized users, and other third parties from intercepting transmitted data.

Perhaps the most important feature provided by virtual data rooms to protect critical information is the role of the administrator. The assigned administrator, rather than the data service, has full control over confidential documents. Each file can be restricted based on preferences and the individually assigned user roles set up by the administrator. These permissions can limit who can see documents, how they can be viewed, and apply printing restrictions. The administrator can also revoke access to the virtual data room should someone leave the company or once their tasks have been completed. The administrator role ensures document security inside of the secure virtual data room.

By enlisting a secure, and tightly controlled virtual data room solution, your company can expertly manage document sharing during the merger and acquisition process. Clients and other third parties will see how you value confidentiality and security, and it ensures a smoother process.