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Legal Documents Are Better Kept Behind the Doors of Virtual Data Rooms

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The development of Virtual Data Rooms (VDRs) has been invaluable in many sectors, but in no sector more so than in Mergers and Acquisitions (M&As). Up until the last decade, law firms kept their dealings strictly on pen and paper, slow to evolve with the times. That has, however, changed, and lawyers would be the first to rave about the importance of having a good VDR at your company’s disposal. Here’s why VDR solutions are more efficient and secure than any other data storing and sharing systems:

Before VDRs became popular, law firms had to set up physical data rooms in which they would keep all of the documents relevant to a particular case. This led to many admin issues, such as having to tabulate each and every document and placing them in chronological order for viewing. The biggest issue, however, was probably that potential bidders (when dealing with M&As) would have to be physically present within the law firm’s offices; and this often required a flight from another country just to get there.

A replacement for these physical data rooms was in demand, but one was not found for some time. Emailing documents to bidders was tried at some point before the creation of VDRs, but it proved to be far too insecure and cumbersome when dealing with many possible bidders. Additionally, once the bidders had those confidential documents, you couldn’t control what they did with them. So what could be done to satisfy these demands? Well, the birth of cloud computing led to the creation of Virtual Data Rooms, and M&A teams found themselves a safe and efficient replacement for physical data rooms.

One of the top criterion for lawyers when choosing the right VDR, is that it shows a thorough audit trail of who has viewed what documents. When physical data rooms were used, documents were often scuffed or marked with pens to give the impression that they had been viewed many times in an attempt to create interest in a deal. With the access control and audit trail that comes with a VDR, you can see exactly who has viewed which important documents and how many times they viewed it, as well as limit access to certain documents should there be a need. This feature of VDRs is especially important when it comes to performing due diligence, as it allows for far greater accuracy and efficiency than before.

Virtual Data Rooms have an implied strength in their security, as that is one of their main functions. VDR servers are kept behind closed doors and are monitored by surveillance or experienced security personnel, so the physical protection of data should not be an issue. The servers are equipped with back-up power sources, top-notch firewall systems and, of course, virus scanning software. Once data is uploaded onto the VDR, the highest commercial-level encryption of those documents should be available, as well as features like mandatory watermarks upon document printing. Every measure is taken to ensure absolute data security. It goes without saying then, that the security provided by VDR solutions is superior to that of physical data rooms.

The importance of keeping a well organised VDR is clear when it comes to ease of use and accessibility. There’s nothing worse than having to sort through pages of documents to find what you’re looking for, so keeping all of the data in their relevant sub-sections is imperative to the efficient use of this tool. The organisational features available in VDRs are what set them apart from physical data rooms, and thus should be used properly to justify the step into the cloud technology.

Other than the security and organisational features that come with a VDR, reliability is one of their main strengths. There’s no use in having all your data stored in a well organised data room if you have accessibility problems or any other technical issues. When it comes down to it, deals are made when information is able to flow, and if that flow is obstructed, a deal may end up in ruins. The reliability that comes with VDR solutions is invaluable in M&A fields, as being able to access secure data at any point and from anywhere allows for a far more fluent process.

Related topics:Security Technological Evolution
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