VDR Checklist: 8 Things to Look for in Virtual Data Room Vendor


Virtual data rooms (VDRs) save businesses valuable time, money and effort. They help companies safely share confidential documents and manage intellectual property concerns.

Data security issues can make or break corporate deals, shape reputations, and otherwise affect a company’s future. That’s why it’s so important to make sure you select an experienced vendor that will help you protect your information and your business.

Virtual data rooms are often used when businesses are going through mergers, raising capital or completing major transactions. However, many companies use virtual data rooms simply to allow employees safe, remote access to internal documents. If a VDR will be part of your long-term file sharing process, selecting the right vendor is paramount.

So, how can you be sure you select the right virtual data room vendor? We’ve compiled a checklist of eight key criteria to answer that question.

1. Ease of Use

Protecting your business’ privacy shouldn’t mean you have to jump through hoops to access documents. A good virtual data room will actually make sharing files easier than other traditional methods.

“Storing your files in a VDR makes it easy to organize and share your documents, benefiting you, your clients, and others who are using the given files,” says Andre Smith, author at Digitalist Magazine.

You’ll want to make sure it’s easy to perform basic tasks, such as inviting users to your virtual data room and uploading files. Also, look for features like drag and drop, bulk upload, and the ability to sync folders from the cloud.

These features aren’t just nice to have during a business deal; they can greatly affect the time it takes to complete a transaction. “All parties who are concerned highly value the opportunity for working with their business processes as quickly as possible. The major means to achieve this is through bulk uploads, good speed, and simultaneously working system processes,” says Cormac Reynolds, author at Datafloq.

You’ll also want to make sure you can easily upload, view and edit different file types. A data room that allows you to perform keyword searches across file types is a major benefit. In short, a more intuitive interface will save a lot of time and avoid the need for special employee training.

2. Ease of Access

It’s important that anyone who needs to access the data room can do so. For example, when a business is raising capital, there are a lot of different people who need access to sensitive information, and ease of access can save valuable time.

“By utilizing the right web-based applications, issuers and intermediaries of a private capital raise can save both time and money, improve investor relations, and have confidence that confidential information is protected,” explains Kyle Engelken at WealthForge Holdings, Inc.

It’s also increasingly important that virtual data rooms be accessible on mobile devices. “Most virtual data rooms are now accessible by mobile applications,” says Toby Nwazor, contributor at Entrepreneur. “This means that businesspeople have the option of using their tablets and mobile phones to continue working, even outside the office space.”

Many companies that use virtual data rooms use them for many months, or even years. Ensuring that your files are easy to access will help you avoid frustration and help keep things moving smoothly during these periods.

file sharing


3. Control

Control is a powerful thing when it comes to file sharing. If a business deal falls through or a contract ends, how will you protect your intellectual property?

To maintain control over your data, make sure you can set detailed user permissions for your projects. IT teams will often give different levels of access to different people within and outside of a company. “The online data room can be established to allow access to all documents or only to a subset of documents, and only to pre-approved individuals,” M&A professionals Richard Harroch and David Lipkin write at AllBusiness.com.

Usually, there are internal teams dedicated to assigning these roles, especially during mergers and acquisitions. “A buyer should charge its team of data privacy and IT experts engaged in the diligence process to work with the buyer’s integration team to ensure regulatory compliance, appropriate regulatory and consumer notices, and other proper steps are taken to limit post closing integration risks,” attorneys John T. Bradley and David A. Rosenfield explain at Lexology.

4. Reporting

Reporting is another feature that shouldn’t be overlooked when considering a VDR vendor. A good data room will show you file history and provide valuable insights.

“An online data room provides a greater level of security, visibility and negotiating leverage for you because you can see who has accessed what files and how deep some buyers have gone to understand your business,” says John Warrillow, founder of the Value Builder System.

Some data rooms will let you filter files by date and time, or alert you of document uploads and other activity. This type of information can be incredibly helpful, especially when you’re dealing with large volumes of data.

5. Support

During important business deals, employees often work around the clock to make things happen. The best VDR vendors will be able to support you 24/7, too. This level of service is what separates great virtual data rooms from average file storage options.

“Most VDRs include access to data room project managers, live support teams and other service coordinators to not only ensure the data is appropriately included and shared, but they also provide a nice ‘warm fuzzy’ touch to ensure both buyers, sellers and the trusted advisors being represented are amply supplied with the knowledge they need to use the system,” says Nate Nead, investment banker and principal at InvestmentBank.com.

Some of the better VDR vendors will even provide a dedicated project manager for your data room. “If you’re a global company, you may find language barriers across platforms become your blockers,” says Dominic Kent, author at Mio. So, ask for project managers who can support you in languages other than English if necessary.

virtual data room


6. Security

Security is the reason many businesses seek out VDRs in the first place. It goes without saying that security is one of the most important features of a data room — but what does that mean exactly?

First, look for vendors that offer high levels of encryption. It’s a good sign if a vendor goes into detail about encryption protocols. Also, make sure your data room uses a two-step authentication processes during the login. “A password alone will not protect sensitive information from hackers–two-factor authentication is also necessary,” warns Brandon Vigliarolo at TechRepublic.

Another way to secure your data is through watermarks and restricted view functions. This will help protect your documents from unauthorized viewing and screenshot capture. Some VDRs can even alert you of such suspicious activity.

Data security is one of the primary threats to modern businesses. “Failing to spot an issue which ultimately leads to a cyber breach can also cause huge reputational damage to a business that ultimately destroys the value of an M&A transaction,” warns Tim Bird in an article at Personnel Today.

7. In-Room Communication

If it’s easy to communicate inside the virtual data room, you can avoid sending emails and wasting time with other forms of communication. A great feature of VDRs is the ability to post a question related to a specific document.

“When a provider offers the Q&A feature in their virtual data room, it should definitely be taken advantage of, if only for the comfort of knowing that others can be easily reached out to within one platform,” says Gab Ted, a writer at Hackernoon.

Bonus points if you have access to detailed Q&A reports. More sophisticated platforms can help you infer future behaviors based on Q&A activity.

8. Pricing

Last but not least: pricing. Different pricing models make sense for different scenarios. For example, some VDR vendors charge based on the amount of data stored, while others charge for each user. Always look for hidden fees and contract clauses.

For monthly or yearly contracts, consider what happens if a deal takes longer to complete than anticipated. “Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises to join forces, identify and eradicate redundancies, agree on prices and strategy, and maintain employee productivity,” says Sean Ross, financial writer at Investopedia.

Though virtual data rooms do require an investment upfront, they usually help companies save substantial sums of money long-term. “Think about the amount you’ll save on fuel, printing, and delivery. You also get to skip paying lawyer’s fees just to get your documents collated and sorted out for you,” investor Vikas Agrawal writes at Tech.co.


It’s often estimated intellectual property can account for as much as 80 percent of a company’s value. With numbers like that, it’s no surprise that safeguarding data is a top priority.

McKinsey’s Hugo Sarrazin and Andy West sum up these challenges best: “As organizations depend increasingly on the information systems that coordinate transactions, manage operations, and aid the pursuit of new market opportunities, the role of technology in mergers becomes more critical.” Thus, a well-planned strategy for data sharing can help businesses succeed.


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