Virtual Data Room for Mergers & Acquisitions - Five Key Questions

In the dynamic landscape of mergers and acquisitions (M&A), Virtual Data Rooms (VDRs) play a pivotal role in securing and facilitating the exchange of critical information.

What is a virtual data room for M&A?

Data Rooms are typically used for M&A to ensure that sensitive documents aren’t removed from the room and copied. Virtual Data Rooms provide a similar function but online.

During the M&A process potential buyers need to review all facets of the business, including financials, technology, roadmap etc.. most of which are sensitive to the business and can be detrimental if leaked.

Using a Virtual Data Room, like Orangedox, provides a way to let potential buyers review key documents while allowing the business to still keep control of it, like preventing downloading, printing and disabling access.

If you do deals, what do you need from a virtual data room provider? 

There’s a number of things you’ll need from a data room provider if you’re looking to use it for M&A or fundraising.

Document Security

Every data room provider should provide a way to secure your documents, preventing them from being printed, downloaded (if required) and shared with others.

Access Controls 

Having control of your documents is key, so make sure you can disable a participant's access at any time. This is very useful if you feel that someone is just on a “fishing expedition” instead of being actually interested in your deal.

Integrates with your Systems

Lots of data room providers don’t integrate with existing systems. For instance, if your company already uses Google Drive, having your data rooms synced with Drive which eliminates time copying files from one system to another, plus it reduces the chances of sending out old or incorrect documents.

Price

Although this isn’t a feature, a price point that doesn’t break the bank is something to look for. If you’re paying over $100 per month for a data room provider then you’re probably paying too much.

If you’re looking for a data room provider that checks all of these boxes check out Orangedox we employ secure sharing technology, have real time access controls, plugs directly into your Google Drive and is $75 per month for unlimited data rooms and participants.

What is the checklist for choosing virtual data room services?

Lots of options when shopping around for a virtual data room, keep these things in mind

Ease of Use

Most virtual data rooms are, well, archaic and super difficult to use. Use something that plugs into what you already use, got Google Drive? Then look for something that can pull from there directly. Check out this article on how you can build a Data Room directly from Google Drive

Security

Most people say to look out for encrypted solutions, ete. However every virtual data room will encrypt your documents and use https. Though honestly that’s not how your documents will be leaked out. The highest risk is some simply sharing the document with someone else, so look for solutions that let you disable downloading of documents. If you can keep the document in the data room that’ll be key to stop proliferation.

Auditing (Tacking)

Auditing makes sure your Data Room has the ability to audit each participant's interactions while they are in the Data Room. You’re going to want to know how much time was spent re-viewing each document.

Cost

Cost is one of the most important factors. Most Virtual Data Rooms use a monthly subscription model which should help reduce costs in general. Make sure you choose something that fits your budget, but also will give you the flexibility to create the rooms you need.

What is a good virtual data room solution for secure data sharing?

It depends on what you’re looking to use the Data Room for. If you want to have a common place to finalize a deal where you need to have documents uploaded and signed then I’d recommend using a document signing platform like Docusign.

If you’re looking to securely share documents in a read only format and you’re already using a platform like Google Drive then I’d recommend using Orangedox. You’ll be able to create secure Data Rooms that are synced with your Google Drive, allowing you to add/remove files from Google Drive and have them show up in your Data Room. You’ll also be able to disable downloading of files and ensure that only the intended participant can access them (no forwarding or sharing files). Plus you can have as many people in your Data Room as you want for a fairly low monthly cost.

What are the best virtual data room service providers for M&A and due diligence processes?

Virtual Data Room providers have been losing market share to cloud storage providers like Google Drive, Dropbox and Box for years. VDRs have traditionally been expensive and cumbersome to use, while cloud storage providers have been cheap (and in most cases free) and easy to use. It’s also hard to compete with free.

Plus tools like Orangedox | Data Rooms & Compliance Tools that plug-in into cloud storage providers and cover the last mile of functionality (tracking & password security) make it a no-brainer choice.

Start your 14-day free trial of Orangedox Virtual Data Rooms and see what Orangedox can do for your business.

Orangedox provides one-click create virtual data rooms that are directly synced with your Google Drive folders.