Lawyers who deal with M&A transactions (not only them, of course) quickly get used to the boxes of documents to be read. Gigabytes of data are subjected to a systematic meticulous analysis, formulations, numbers, conditions, requirements, etc. are carefully checked. Not so long ago, the closing of a deal was preceded by a “cult trip” by the buyer’s lawyers to the seller’s office in order to get acquainted with all the documents necessary for the due diligence process in a separate room. Technologies have made it possible to speed up work through the exchange of electronic versions of documents. This can be done by emailing the requested files or by using cloud storage services. The problem with both options is security. Maybe someone didn’t know, but it’s not safe to just share important documents via email or leave a link to Dropbox. In this note, we look at a useful technology that solves these problems. We’re talking about virtual data rooms.
In terms of terms, VDR is a store that allows you to share them with third parties via access setting rules. In this way, you can set different access rules for different stakeholders and teams. Users can log into the system by entering a username and password that contains information about them and the usage rights available to them. It is security that separates specialized VDRs from public ones.
Types of VDRs
There are two groups of VDRs on the market https://genevalunch.com/virtual-data-room-some-insightful-market-facts/. The first group may include the three most well-known VDRs: Merrill Datasite, RR Donnelley, and Intralinks. All three companies have a wealth of M&A experience and their solutions are packed with functionality without sacrificing security. They also allow you to download and store large amounts of data. The price of their services is quite high as it is formed on a per-page basis and a fee for additional users.
The second group includes SecureDocs, V-Rooms and Ansarada. These systems are more convenient to use and relatively inexpensive.
It should be noted that apart from the above, there are no particular differences. Both groups share the priority of security, for example they all meet the “gold standard” for electronic financial actions.
Factors to Consider When Choosing a VDR
Of course, this aspect will interest you the most. It is necessary to find a developer who stores all the information themselves and does not share it with subcontractors. Well, the certification of course. Plus testimonials, customers etc.
Comfort and Functionality
Here it is necessary to take into account the file format with which the system can work, whether it is possible to download zip, on which operating system it is available (Mac?). When dealing with international transactions, it is important that the VDR is open 24/7 and supports multiple languages. See if there is a free demo version.
Most developers base their prices on the storage space used and the length of time the VDR is open. Some M&A firms can afford to provide their own VDRs. If you only need VDR once, use services that allocate storage space based on time. If you want to use the VDR regularly for a huge number of actions per year, buying a subscription is your choice.