Virtual data rooms are mostly use for mergers and acquisition deals. Buyers need to gain access to masses of confidential documents as required by the process of due diligence. Many of this documents are usually confidential and should be stores in a secure place where they can only be accessed by authorized people. Virtual data rooms make it easy for prospects to review and share documents without having face-to-face meetings with the seller. This makes the process cheaper, faster, cost effective and efficient. However, data rooms, or virtual data rooms are not only meant for M&A deals, there features are also useful for other deals and transactions that include:
- Joint ventures
If you want to collaborate with another company to start a joint investment then you can use a virtual data room as a medium to share information and data when making the deal. You can set milestones, share documents and communicate through the secure data rooms.
- IP licensing
IP documentation is one of the sensitive types of data that a business should always keep to themselves. Sharing your IP documentation with others need to be done carefully to ensure that it still remains secure. With VDR, you can set documents to be read only so that one cannot download the information from the system.
- Bankruptcy and restructuring
Bankruptcy and restructuring process involves many parties. for the parties to communicate and share information in a secure manner then there is need to use a secure medium. This means they use Virtual Data Rooms.
When companies want to apply for funding, they need to show their past performance to their potential investors. Such information should not be taken for granted and shared in a careless manner for the sake of your business and the good relationship with your investors so you need to do it securely. This means you also go the VDR way.
So no, VDR is not only to be used for mergers and acquisitions.