Chad Brown

3 min read

Data Rooms

The Importance of Virtual Data Rooms in Mergers & Acquisitions

Virtual Data Rooms have come a long way from their physical origins. Providing a secure and easy way to share confidential material during the M&A process.

What is a Virtual Data Room?

Never heard of a Virtual Data Room before? Well you’re not alone, unless you’re working in Mergers and Acquisitions (M&A), looking to sell your business or raise a round of funding you probably have never even heard of the term.

So what are they? Way back in the 1900’s and early 2000’s lawyers would offer a physical room where important confidential documents (or data) relating to a deal (eg raising funding or selling your business) would be kept. Both parties would have access to the room to review these documents, however nothing could be removed from the room, ensuring that highly confidential material was always controlled under lock and key. 

Fast forward to today, these data rooms have moved online (hence the term “virtual”) and are used more widely to secure confidential material. They provide a huge cost savings over the physical data rooms, and allow for easy access to documents whenever they’re needed.

Why do you need them?

When a buyer or investor is interested in the company, to either purchase the business or make an investment, they’ll require the owner to go through the due diligence process. This process helps the buyer/investor pull back the curtain on the inner workings of the company, sort of like an in-depth tax audit.  They’ll want to see documents like partner contracts, intellectual property information, employee details, financial statements, capitalization table, and technology road maps to name just a few.

Virtual Data Rooms allow these documents to be shared securely, ensuring that you stay in control of your confidential documents at all times. They also allow for documents to be viewed remotely, helping to eliminate the location barrier when it comes to closing a deal. All in all this helps expedite the M&A process when closing a sale or give potential investors the right information to help close a round of funding.

How do they work?

Virtual Data Rooms started off as a simple content management system, where a participant could login with a user name and password to download specific files. This has evolved to more secure systems, like Orangedox’s secure file sharing technology, which removes the need for passwords (which can easily be shared) and allows for documents to be only viewed online, so that control can be kept at all times.

Most Virtual Data Rooms now also integrate into cloud storage providers, like Google Drive, making it simple to create data rooms from where your documents are already stored. 


Virtual Data Rooms have come a long way from their physical origins, providing a secure and easy way to share confidential material during the M&A process. Using a Virtual Data Room will help secure your business when courting a potential buyer or investor, ensuring that your confidential documents stay confidential.  

Oh and don't forget to check out Orangedox's Data Rooms, they plug directly into your Google Drive allowing you to create data rooms directly from your Google Drive folders.