Due diligence is one of the most complex and at the same time frequently help business processes. There are many reasons why would the company need to go through this procedure. And each time the firm has to provide third-parties with a massive number of
various documents. It requires a lot of resources and time, especially if the business has to start from the very beginning each time.
With the virtual data room, due diligence becomes effortless for many different reasons. First of all, once you upload the papers to the online repository and organize them, you won’t need to do it again next time. All you’ll have to take care of is to update the documents and go through the structure once again to ensure everything is alright.
Of course, it’s not the only advantage data rooms can offer. There are plenty of reasons why you should adopt this technology and use it for due diligence. So let’s talk about each of them.
The most obvious reason is that with a data room due diligence is quicker and cheaper. The process moves faster because the company can provide third-parties with documents as soon as possible. There is no need to travel to bring the papers. Once the files are in the online repository, and third-parties have their access granted, they can just enter the virtual data room and study the information.
Also, if new documents are uploaded, participants of due diligence get notified via email. Such a simple feature allows third-parties to react faster and view the files sooner. Therefore, there are no delays in the process. Everything runs quickly and smoothly.
Since there is no need to travel to pass the documents companies can save a significant amount of costs. They don’t have to pay for flights, hotels and other expenses to only give papers to a third-party.
Another reason that might be not that important to many business owners but is still significant enough to consider is that with virtual data rooms there is no need to print piles of papers. First of all, it saves costs, too. But moreover, it makes VDRs ecologically clean. When documents get printed, you don’t just waste paper, but evaporate harmful chemicals printing ink contains. So if you are worried about our environment, you should start using virtual data rooms.
This technology is much more than just a virtual repository. It is a teamwork tool, too. During due diligence, it is essential to maintain effective communication between sides. And data rooms offer such an opportunity. Users can comment on documents and highlight certain paragraphs to draw the attention of others.
Also, there are Questions and Answers sections. The administrator of the data room can assemble it in advance answering all the frequently asked questions to simplify and speed up due diligence. But later third-parties can ask here their inquiries, too. Such an approach allows sides to build streamlined interaction and solve matters faster.
The due diligence involves a lot of sensitive information. So the business should be careful sharing the required documents. Virtual data room providers encrypt both the online repository and data transfer ways to protect the files at each step. Vendors use the strongest currently existing encryption to make sure there is no way hackers can get their hands on the data.
To offer additional protection, providers implement multi-factor authentication to guarantee that unauthorized individuals won’t enter the data room. It means that users will have to enter not just their username and password, but prove their identity in one more way. It can be a code sent in SMS to the user’s phone upon logging in. Or if the person enters a data room via a mobile device, they can scan their fingerprint. There are many options, and users can pick the one convenient for them.
Also, data rooms have other features like watermarks to let managers protect the documents from unauthorized usage. Besides, the administrator of the VDR can control the level of access users have. There are different options of user rights – some can just view the files, and others can edit, share or even print them.
Moreover, the manager can see the activity of participants in the virtual data room. It works as an additional layer of security and as a small cheat for businesses. Since third-parties can’t see each other in the data room, they don’t know who else is taking part in due diligence. And the administrator who has a full picture of everyone’s activity can analyze it and make data-driven decisions to take the most out of current due diligence. Also, there are useful reports that can offer insights, too. Therefore, the business gets a lot of advantage over third-parties.