What is virtual data room software?
Virtual data room software is a security-first online workspace build for information sharing, collaboration, simple file management, and data protection.
There are many activities where businesses and organizations benefit from data room providers — M&A, online due diligence, real estate management, IPO, fundraising, and others.
Virtual data rooms are indispensable in today’s business landscape as they ensure secure business operations and protect businesses from cyber-related financial losses. A study finds that a single critical infrastructure breach costs $4.85 million.
Virtual data rooms implement zero-trust frameworks that protect companies from many kinds of security risks, including the human element that makes up 95% of cybersecurity incidents.
However, top-notch security is only one of several aspects driving the demand for virtual data rooms. Let us explore more reasons businesses choose virtual data room software for complex transactions and daily operations.
Why do people choose data room software for business transactions?
According to Gartner’s research, 89% of companies implement digital tools in all business growth strategies. That includes workspace management tools, planning tools, and virtual data rooms.
Meanwhile, over 69% of Deloitte M&A trends respondents report using digital tools, including virtual data rooms, for due diligence and other M&A processes.
Here are some more numbers on the value of virtual data rooms for M&A transactions:
- 50% shorter Transitional Service Agreements (TSA) period. Data rooms offer out-of-the-box contract automation and process standardization solutions that work much more effectively than the internal disconnected systems of deal parties.
- 30% shorter overall transaction time. ERP software, including virtual data rooms, cut the transaction time by three months due to process efficiencies.
- Up to $75 million in average combined saved costs. Due diligence automation, centralized communications, and speedy transactions create up to $30 million and $45 million in savings for buyers and sellers, respectively.
What to consider when choosing the best data room provider?
Considering the fact that there are many virtual data room providers on the market, choosing the one for your company’s needs might be challenging.
Many users face difficulties when deciding which virtual data room software to use due to the lack of understanding what exactly they need from an online data room service.
Considering the fact that the average cost of data breaches in the United States in 2021 was 9.05 million dollars, security is obviously what matters the most. But what else? And what security features are important for data safety? This is what I cover further.
So, what to pay attention to when looking for a reliable virtual data room?
The main guidelines are:
- Market presence
- Price vs. quality ratio
- Technical support
After thorough virtual data room comparison based on these features, I defined two major players — iDeals and Intralinks.
As an illustration, let’s compare these two secure data room vendors in more detail.
#1. Market presence
When we talk about market presence, it’s important to notice how long the provider is functioning, what companies are in their portfolio, and what their experience is all about.
For instance, dealing with a newbie in the virtual data room industry might not be as promising as you would expect, especially for enterprises.
I managed to find that Intralinks was established back in 1996, while iDeals emerged in 2008.
Both companies have years of experience and are chosen by notable clients. After a quick research, I found out that L’Oréal, Starbucks, and Credit Suisse have worked with Intralinks. Whereas giants like Deloitte, Toyota, and American Airlines preferred iDeals. And these are only a few examples.
It’s worth mentioning that this information is open and easy to get — it only took me a few clicks to find it. In my opinion, this speaks loud about companies’ transparency and makes me, as a potential customer, trust a data room solution vendor a bit more from the very beginning.
Knowing the date when a particular virtual dataroom company was founded is still not enough to start considering it for your due diligence process or other business needs.
Always search for a solid track record and evidence of the company’s ongoing evolution.
Even the fact that the company has been operating for decades might mean nothing if there are no changes in its growth since its launch.
When it comes to the particular data room vendors I was reviewing, the proof of their evolution is obvious.
I’ve figured out that Intralinks was acquired by SS&C Technologies in 2018. It definitely speaks of the provider’s desire to grow bigger.
Whereas iDeals, despite being younger, has already acquired BoardMaps in 2019 and made it another successful business direction. I see it as an undeniable sign of the company’s growth and ambitious goals for the future prosperity as the best data rooms platform.
#3. Price vs. quality
Naturally, all the online data room providers you’ll probably consider will have different approaches to pricing models. But what’s important here is whether that cost is justified by the set of features VDR providers offer.
While it might seem logical to go for the lowest pricing plans, you should better dedicate a little more time to the investigation and find out why a particular vendor has that pricing model and whether it fits your business needs.
To make an informed decision, also do this:
- Make sure a certain data room provider offers a convenient pricing model based on your requirements.
- Evaluate your project’s size, needs, and industry specifics.
- Look for hidden payments and unclear costs.
When it comes to the virtual data room pricing of iDeals and Intralinks, I find both vendors rather expensive. But the key point here is that you don’t only pay for the features themselves when buying a subscription. You also create an ongoing relationship with a brand, sales, and support and “purchase” the service.
What disappoints me as a potential subscriber the most is the absence of virtual data room pricing details on iDeals and Intralinks websites. I would appreciate having a chance to do at least minimum research myself before contacting the sales.
However, I was able to get all the particulars about data room pricing only after contacting the support team. This is not very convenient, especially for those companies that only start thinking about implementing virtual data rooms and just look for options.
Still, iDeals at least provides a detailed description of what exactly a user gets when purchasing a specific plan. This way, you can figure out what will fit your needs the best without the need to contact the sales or support department.
In terms of data room price and quality ratio, iDeals and Inralinks differ as well. When examining each vendor, I’ve come up with the following observations:
- Intralinks has no free trial. iDeals offers free 30 days to test the software. This is especially useful for small-sized businesses that don’t possess big budgets yet.
- High pricing presupposes outstanding performance, extreme user-friendliness, and a set of unique features. Though the variety of services provided by Intralinks is wide, I can’t highlight anything specific that would differentiate it from others and justify the price. On the contrary, iDeals seems to find the balance between the price and quality of features offered.
- iDeals seems to be more flexible and loyal with their customers. After getting pricing details, I realized my company just couldn’t afford any of the vdr data room plans. But then, a manager offered us a customized plan with a unique set of features based on our company’s requirements. This allowed us to get the product, but for less money and without needless tools we weren’t going to use anyway.
It’s always a good idea to go for a data room provider that specializes in the same industry your business operates in. This way, you can be sure a particular vendor is able to provide you with the features that will best fit your needs.
Conduct a little investigation on what virtual data rooms your main competitors use and how they profit from their services.
I’ve come to the conclusion that my company’s requirements would be best met with the help of iDeals and Intralinks virtual data room providers.
However, after thorough research of the clients’ listings on Intralinks and iDeals websites, I’ve determined a slight difference between their spheres of use.
Intralinks is mainly used in such industries as finance, legal, life science, and energy.
Whereas iDeals generally comes in handy in investment banking, legal firms, life sciences, business consulting, manufacturing, and real estate.
To my mind, both virtual data room service providers would fit the needs of rather medium- or large-sized companies. Nevertheless, startups could also benefit from implementing these online data rooms but still would better prefer iDeals.
The technological adaptability of virtual data room vendors is also important.
It’s great when you and your clients or potential investors can reach your dataroom from any device. This way, you enhance your chances of closing the deal and actually win the prospective bidder’s attention and appreciation.
When it comes to the deployment capabilities of iDeals and Intralinks, I’ve found out that both software products are web-based and quite flawlessly run on such operating systems as Windows, Mac, and Linux.
To try both vendors out, I didn’t need to install any extra plugins, which greatly simplified the usage. This is especially valuable since not all data room users are supposed to be tech-savvy.
The fewer efforts are needed to navigate a particular virtual data room, the better.
What I enjoy the most about iDeals and Intralinks is that both vendors have mobile applications for iOS and Android.
This enables your potential bidders to view confidential documents even on the go and allows you to effortlessly manage the access permissions or provide answers in the Q&A section anytime.
#6. Technical support
Being able to reach support any moment you face difficulties with using data room software is essential. When you’re paying for the service, that service should be high-quality.
A dedicated and knowledgeable customer support team often affects the brand’s reputation more than anything else.
To ensure every subscriber gets first-rate assistance if any problem appears, I’ve tested the customer support of both iDeals and Intralinks. This is what observations I’ve come to:
- Each vendor offers a few contact options: phone, live chat, and email.
- What I especially enjoyed was that non-English speaking clients can get help in their native tongue. Support teams of Intralinks and iDeals speak more than 10 languages.
- The speed of chat response was not more than 30 seconds with iDeals and striking 6 seconds with Intralinks. Obviously, the support team of Intralinks answers you lightning-fast. But I’ve also noticed the quality of the help they provide can be questionable, as their comments were sometimes general and not case-specific. For instance, when I mentioned I experienced ongoing bugs, the only answer I received was a recommendation to change the browser. I find it unprofessional.
The best way to assess the quality of particular virtual data rooms is to search for real virtual data room reviews.
Too often, general ratings don’t say much about actual software’s performance. In comparison, customers’ feedback can provide you with more details.
To have a complete picture of iDeals and Intralinks, I’ve studied what previous and current subscribers say about each provider. These are my key observations:
- Intralinks has significantly fewer user reviews in comparison to iDeals. This speaks loud about iDeals popularity.
- The most frequent comment clients state about iDeals is their extreme user-friendliness. And I can certainly relate to that. Setting up a virtual data room and configuring the software was easy for me. I’ve uploaded all the required documents in seconds, thanks to the drag and drop and bulk uploading. And I especially enjoyed the automated indexing of newly uploaded files and folders, which reduced the need to manually rearrange them in order.
- The majority of Intralinks’ customers note that the software suits the needs of enterprises more than small or one-person businesses. They also indicate that the UI and UX are dated, and data management can be quite troublesome. My experience with Intralinks was pleasant in general, but I confirm the complicated setup and configuration. I found out that the automatic index numbering doesn’t work sometimes, and it suddenly logs me out at some stages. However, I noticed that uploading and sharing large files and folders is fast.
What conclusion have I drawn based on the Intralinks and iDeals comparison I performed?
- Intralinks is a great option for large corporations. I’ve found out that it’s often used in such industries as finance, legal, life science, and energy. The software has years of experience and offers many features for secure data sharing and storing. Though the interface is sometimes clunky and dated, the overall usage of Intralinks isn’t that bad. However, small companies might want something more user-friendly and easy to understand.
- The iDeals VDR will suit the needs of not only big companies but small businesses and startups as well. The common industries where iDeals comes in handy are investment banking, law firms, private equity, life sciences, healthcare, business consulting, accounting, manufacturing, and real estate. I’ve figured out that the main trademark of iDeals is its user-friendliness, which makes it a favorite virtual data room software for many firms (and that’s what the majority of customers indicate in their reviews).
Compare virtual data room services
|Virtual Data Room||Rating||Deployment||Best for|
M&A, Due Diligence, Real Estate Management, Fundraising, Investment banking. Small, Medium and Large businesses.
Large corporations, long-term projects. M&A, Due Diligence, litigation.
For the organization of work and communication with employees and clients, safe information exchange. Used in tourism, real estate, and information technology.
M&A data rooms for businesses in any industry. Suitable for short and long term projects. Due diligence.
For small, medium and large businesses. Used for the secure exchange of files and sensitive corporate data within the company and with third parties.
Beneficial to use for managing large corporation transactions: M&A, fundraising, due diligence. Also for government agencies and global companies.
Mergers and acquisitions, due diligence and contracting. Suitable for use in the international market for medium and large businesses.
Used as a corporate repository, software for managing boards of directors, document flow within the company. This is a good solution for large businesses and long-term projects.
For short and long term transactions for clients from 3 people to large companies. Safe exchange of confidential data in cloud-based storage.
Safe exchange of corporate data, short-term and long-term financial transactions. It is used in the financial sector, real estate management, for small and medium-sized businesses.
For the secure exchange of files and data within the company and with third parties. Suitable for clients of any size and personal use.
M&A, IPO, fundraising transaction for clients of any business size, including large corporations. Suitable for international transactions.
Trusted data room solution for clients from financial institutions, investment funds. The best repository solution for large banks.
For M&A Deals, Board Meetings, Legal Proceedings. Digital rights management (DRM) software for videos, PDF, Office and OpenOffice files, TXT files, and images.
Deal management and project collaborations for small, medium, and large business clients. For short and long-term business deals online.
For short-term transactions of small and medium business clients. Used by startups for fundraising and initial public offering.
Organize and exchange confidential documents during Due Diligence and Dealmaking for medium and large businesses. Used in litigation, life sciences, investor communications.
For mergers and acquisitions, real estate management, asset lifecycle management, IPOs and capital raising operations. For clients of all business sizes.
M&A, Due Diligence, Real estate management, Fundraising, Investment banking services. Clients of all sizes, including startups and corporations.
Used as a digital workspace for secure, enterprise-grade file sharing. Best suited for large corporations, businesses, long-term transactions.
The best solution for personal use, file sharing. It is used for organizing document flow within individual departments.The best solution for personal use, file sharing. It is used for organizing document flow within individual departments.
Share confidential documents with investors, consultants, business partners on the Polish market. Used for mergers and acquisitions, due diligence, business transaction management.
For secure file sharing, for short-term financial transactions, due diligence. Chosen by managers of small and medium businesses, for short-term use.
The best solution for the German M&A market. Complies with European safety standards.
Solution for the Australian and European M&A market. Suitable for small and medium business clients for short and long term deals.
Software for M&A transactions in the European market. The best solution for organizing transactions on the German market.
For managing legal processes, law firms, corporate legal contract management.
For lifecycle management of contracts, mergers and acquisitions, loan syndication, private equity transactions. Used by small and medium-sized companies in various industries.
Cloud file transfer and collaboration apps for German market managers. For team communication, tasks of joint work on projects, exchange of business data with external partners.
Used by small business owners for short business transactions in the German market.
Software solution for conducting business processes mineral owners and mineral managers.
For Italian business owners. Used for digital workplaces, due diligence, board of directors, stock exchange listing, NPL, arbitration, internal audit, fundraising, real estate.
Checklist for choosing a reliable VDR provider
Here are a few simple but essential criteria that characterize the best data room for any industry.
- A provider has been on the market for a long time.
- At least 90% of the virtual data room reviews are positive.
- A company guarantees high quality of virtual deal room services as agreed upon in its SLA.
- Clients know how long it takes the support team to process the request.
- Your industry is not new to a provider.
- A vendor’s experience includes cooperation with small companies and global corporations.
- VDR software solutions meet the needs of your business (95% or higher).
- Regardless of the client’s attitude towards cybersecurity, top data room providers focus on protecting confidential documents.
- A company constantly introduces innovations to make the user experience within the VDR faster, more convenient, and easier.
The most important criteria for choosing a VDR provider is a “crash test.” It’s the examination of data room services during the trial period. To be sure that the chosen provider will suit your company’s needs, you should test its work and capabilities in every way possible. Anything from “dumb” questions to the “this feature doesn’t work properly” scenario goes.
But, before proceeding to a trial, your team must prepare and choose a provider. To make it easier for you, we have arranged a small guide on how to select a virtual data room and its provider among dozens of virtual data rooms.
Let us compare the free trial capabilities of the three best VDR software providers.
iDeals serves over a million users from 175,000 companies worldwide. It unlocks the following capabilities during its no-commitment 30-day free trial period:
- 8 levels of granular access controls for advanced document security
- 24/7 multilingual customer support speaking 13 languages
- Auto-notifications for new data room activity
- Detailed reporting and advanced Q&A module
- Quick large file uploads (up to 200 Mbps)
iDeals allows you to “stress-test” all premium capabilities, from data uploading to innovative security features, without commitment.
This provider offers an unlimited preparation period for the enterprises and doesn’t charge you until your project goes live.
You have no obligation to use iDeals once the trial expires. Among all solutions, It is the best virtual data room software regarding free trial capabilities.
Caplinked offers VDR services to over 250,000 users from small, medium-sized, and large companies. You can benefit from the following services under its 14-day free trial:
- One project, 2 admins, 500 MB of storage, file encryption, dynamic watermarking, and the basic digital rights management system.
- Pre-configured data rooms for time-saving purposes.
- Price discounts one month post-trial.
Unlike iDeals, Caplinked doesn’t offer premium features under its free trial. This vendor provides enough tools to understand how its limited services work and judge the anticipated benefits of its full-fledged VDR.
Intralinks has facilitated over $34 trillion of M&A deals over its 20-year operation history. This vendor offers the following services under its 30-day free trial:
- Limited use of data storage, permission-based user roles, and M&A workflows.
- 24/7 customer service.
- Free M&A resources available on the main Intralinks website.
Please note that the Intralinks trial service page hasn’t been updated since 2013. Currently, this vendor offers free trial services selectively depending on its internal criteria. It means not every customer is eligible for the free trial.
Based on user feedback from major review platforms, such as GetApp, Capterra, and SoftwareAdvice, Intralinks rarely provides free-trial VDR access.
You will most likely get a free demo presentation instead. It makes Intralinks the least flexible vendor regarding the trial digital data room services.
Before proceeding to a trial, your team must prepare and choose a provider. To make it easier for you, we have arranged a small guide on how to select a virtual data room and its provider among dozens of virtual data rooms.
What are virtual data rooms used for?
Virtual deal rooms meet the requirements of many industries and projects. But several use cases entirely depend on online data room providers. The most common virtual data room applications include:
- Due diligence
- Real estate
Virtual deal rooms meet the requirements of many industries and projects. But several use cases fully depend on online data room providers.
- M&A. Virtual data rooms for Mergers and Acquisitions take up a large portion of the market. The best data room providers for M&A enable users to significantly streamline the due diligence process by simplifying deal-making and securing large-volume document sharing.
To select the best virtual data rooms for M&A, make sure they include:
- Flexibility to share sensitive data securely with specific groups and users
- Advanced VDR’s functionality for generating a real-time audit log
- Q&A tools for quick and easy exchange of questions and answers throughout the transaction
- Bulk upload and download to accelerate the deal-making process
- Due Diligence. An online data room is generally the best solution for intricate due diligence procedures. That’s why many secure data room services offer templates and checklists to their users.
Top virtual data room providers offer the following capabilities for due diligence:
- Data room index and reordering to let investors work in an organized controlled environment with the latest updates
- Access roles that ensure data security despite the involvement of multiple parties
- Intuitiveness, allowing users inside and outside to use the platform effortlessly
- Watermarking, which excludes the possibility of leakage from investors
- Real Estate. Similar to M&A virtual data room providers, virtual data rooms that cater to Real Estate know just how complex and multi-layered their customers’ needs are. Templates and versatile file compatibility usually come in handy in such cases.
Apart from the data security and convenience features that are equally important for real estate transactions, best virtual data room solutions must also support:
- Managing multi-projects in one place at the same time
- Multiple files of different formats since real estate involves images and videos
- Video tours that allow buyers to see everything without going anywhere
- Uploading of engineering files such as CorelDraw or AutoCAD
- IPO. Filing an IPO is yet another multiple-stage process that sometimes requires the expertise of third-party experts. A virtual data room provider allows users to organize the process in the most straightforward way and avoid data confidentiality concerns.
For speeding up and improving an initial public offering, cutting-edge online data rooms offer:
- Secure electronic signature for remote cooperation with investors
- The ability to remotely manage sensitive data in the event of termination of cooperation with third parties
- Branding of electronic data rooms to attract investment bankers and stand out
- Data encryption to eliminate risk when deal parties share confidential files in large volumes
- Corporate storage. Switching from a physical storage system to the Virtual Data Room services can visibly cut down costs, support the company’s green initiative, and increase document safe-keeping.
For secure document management and storage, choose a virtual data room solution with:
- Compliance with security standards such as ISO27001, SOC2, and GDPR
- Data centers with multiple layers of surveillance, biometric authentication systems, physical security
- Built-in redaction that allows working with data inside the data room without additional programs
- Granular document permissions for per-file access levels in secure cloud storage
- Fundraising. Raising funds typically translates into file sharing data with an unlimited number of potential investors. Virtual data rooms enhance this process by allowing admins to closely monitor any activity, regulate document access, and restrict unwanted downloads and sharing.
Virtual data rooms simplify fundraising if a client can benefit from:
- The ability to restrict access by IP address or time for full control of sensitive documents
- Granular user permissions with which clients can manage downloading, viewing, printing, and editing
- Tracking user activities down to how long they have been viewing contents and what they have looked for in the storage
- Setting the file expiration date, after which the data becomes not accessible to investors and other parties
- Banking. Banks handle a lot of personal data that can be subjected to identity theft and other criminal activities. Utmost document security and confidentiality that come with data rooms are irreplaceable in banking and other financial transactions.
So, here is what organization should look for in the best virtual data room solutions:
- Advanced security for documents, including compliance, sensitive information encryption in transit and at rest, protection measures for data centers
- Tools to quickly and easily manage storage access for interested parties
- Business intelligence, delivering deep insights to improve business strategy
- Accelerated upload process with direct synchronization of documents on network and local drives
- Corporate Development. Arranging all the necessary information in a secure data room allows businesses to oversee the big picture, pick up on trends and weaknesses, and develop suitable developmental strategies.
For this sector, the best virtual data rooms provide:
- AI-powered activity tracking instruments for creating budgets and forecast models based on trusted analytics
- Ease of use for a smooth collaboration with industry or government regulators
- A single protected space for documents operations and business communications
- End-to-end deal management for improving the entire lifecycle for the sell-side and buy-side
- Startups. One of the key data room features for startups is monitoring each visitor’s engagement. By evaluating the time spent on every item, virtual dataroom administrators can improve the data flow and structure to stimulate the interest of other potential investors.
Besides, an online data room provider should give startups tools for:
- Due diligence without the risk of data leakage and with complete access control
- Investor communication via Q&A in an easy-to-use and secure environment
- Pitch decks activity information, which provides knowledge about the interest of investors and their engagement
- Transparency of capital raising processes to convince investors of data accuracy and integrity
Who uses virtual data room software?
Businesses of all sizes address virtual data room companies. Thus, one virtual data room provider may serve over 100,000 companies globally. Drawing on our own experience, the following companies use virtual data rooms more frequently for these activities:
- Investment banks — M&A, capital raising
- Real estate firms — Document management
- Healthcare organizations — Clinical trials and document management
- Government agencies — Secure file storage and sharing
- Non-profit organizations — Document management, fundraising
- Startups and tech companies — Fundraising, investor communications, M&A
What functionality should a data room have?
It is important to understand every data room’s mechanics to be able to choose the most suitable one among available virtual data room solutions. Below are some of the industry-leading features you need to pay attention to during virtual data room comparison:
- Document security
- Access security
- VDR security compliance
- Document management
- Ease of use
- User management
- Customer support
- Speed & Availability
The best data rooms implement several levels of security, including:
- Dynamic watermarking
- Fence view
- Remote shredding
- Adjustable document
- Download and screenshot restrictions
- Strong encryption methods
A secure virtual data room should allow you to adjust access privileges for every member. Thus, you need tools to establish a priority level framework, limit access to any item inside the data room, and regulate access from specific devices and locations.
- Access control and expiration
- Digital rights management
- Time and IP access restriction
- Granular user permissions
- Multi-factor authentication
VDR security compliance
Reliable electronic data room providers are usually open about their security certifications and compliances. The security benchmarks vendors have to comply with are:
- ISO 27001
- SOC 2
- SSAE 16 (particularly for M&A)
The virtual deal rooms are the most effective when managing confidential documents is seamless. Therefore, look for the key features such as:
- Drag and drop upload
- Bulk uploads and downloads
- Diverse format compatibility
- Auto indexing
- Full-text search
Ease of use
You don’t necessarily need to have years of experience dealing with Virtual Data Room service providers to judge the ease of use. A data room software is likely to be user-friendly if:
- You don’t need plugins to run it
- The services are available in multiple languages
- There’s an option of a single sign-on
- There are apps for iOS and Android
- You can quickly swipe and scroll between different items in the data room
Regardless of the size of your project, you need to manage and supervise all authorized users and guests for security reasons. Advanced virtual data rooms offer handy tools for:
- Bulk invitations
- Group access regulation
- Detailed user permissions
- Viewing permissions
Another important criterion for potential users that compare virtual data rooms is the support team. More specifically, you should check their availability, response time, communication channels, and these necessary features:
- Live chat
- Personal manager
- Phone & mail
- Call center
Speed and availability
You can judge the performance of any given Virtual Data Room by the following criteria:
- Speed of uploads and downloads
- VDR’s uptime
- Minimal number of maintenance windows
Making the data room look and feel like a part of your company can be a great asset. Some of the VDR customization features usually include:
- Enabling automatic translation
- Custom watermarks
- Adding brand colors and logos
Data rooms often play the role of virtual meeting spaces. That’s why the best virtual data room vendors include features for interactive information gathering and analytics. For example, a complete Q&A toolset has to cover:
- An FAQ section
- Live discussions
- The option to restrict access to specific threads
- An ability to assign experts
- A Q&A reporting generator
Virtual data room software trends for 2023 and beyond
Let us discuss the latest trends and developments in the virtual data room industry for 2023 and beyond:
- Cloud-based VDR
- AI-powered VDR
- Increased focus on compliance and security
- Latest industry developments
- Future outlook
The global cloud technology adoption in 2022 increased 20% from 2021 and over 39% from 2017. The virtual data room industry also contributes to the global adoption of cloud computing, as all modern VDR providers offer cloud-based deployment options.
A cloud-based VDR allows you to bypass cumbersome software installations and log in to your workspace anywhere from any device. This feature enables the following:
- 24/7 important data access
- Top-notched cloud security
- Business continuity
Mark Livingston, CEO, and Managing Partner at Infosys Consulting, believes companies can significantly accelerate M&A strategies using cloud technology.
Cloud services, including virtual data rooms, deliver quick M&A results due to seamless centralized collaboration tools. As a result, cloud-based VDRs will dominate in 2023 and beyond due to high market demand and global cloud transformation trends.
AI technology has been in the M&A industry since 2017-2018. The most innovative companies have been using this tech to accelerate due diligence. AI and machine learning automates the following due diligence processes:
- Identifying transaction targets
- Reviewing contracts
- Identifying value-creation opportunities
- Identifying M&A risks
- Developing investment decisions
Today’s virtual data rooms actively implement AI and machine learning technologies to automate and simplify the following processes:
- Data analysis
- Contract review
- Due diligence
- Document redaction
Thus, based on the IBM report, 71% of Vanguard companies apply AI in the later stages of the M&A lifecycle. Additionally, 30% of electronic companies have higher levels of M&A automation due to AI tools, including AI-powered virtual data rooms.
2023 will likely accelerate AI development in the data room and M&A industries as companies adopt new technologies to stay competitive. According to the Deloitte consulting firm, companies are falling behind if they don’t use AI-powered data analytics tools.
Increased focus on security and compliance
The average data breach cost will surpass $5 million, while the total cost of cybercrime is predicted to reach $8 trillion by the end of this year.
The increasing cybersecurity threat has become the main driver for mass virtual data room adoption. Businesses are predicted to spend a record-breaking $188 billion on data security in 2023.
Our findings indicate that data room providers will implement more data security and compliance features to stay competitive. For instance, iDeals has implemented a striking combination of security modes:
- Restricted viewing and read-only access for selected users
- Secure spreadsheet formula viewing
- Encrypted download
Based on our observations, data rooms will also implement more compliance standards from standardization authorities.
Latest industry developments
The virtual data room industry has recently experienced several key developments:
- iDeals acquired Boardmaps in 2019. This deal expanded the iDeals technology portfolio and helped it enter the virtual boardroom market.
- Datasite acquired Firmex in 2021. This deal reduced the competitive pressure and expanded the customer base for Datasite.
- Vista Equity Partners acquired Citrix and merged it with TIBCO Software in 2022. This merger reduced competition, expanded the customer base, and achieved several operational synergies.
The virtual data room market is live and thriving, enumerating over 100 VDR service providers and preserving healthy competition. Based on the latest IMARC Group report, the virtual data room market is estimated at $2.2 billion and will reach $4.8 billion by 2028, at a CAGR of 13.9%.
Based on the report findings, the virtual data room industry will show resilience despite anticipated economic headwinds due to high demand among businesses and organizations.
Frequently Asked Questions
Virtual data room (VDR) or Deal Room is electronic storage that differs from other programs in additional functions and grades of safety. The online platform overshadowed traditional storage. It took a little time because a vdr offered businesses previously unknown tools. Administrators have a lot of advanced functions to manage access. Users receive permissions to work with certain data and for specific actions. In any case, managers can restrict access for each guest or authorized person. Up to this point, no programs have managed to break the integrity of this tool.
A virtual data room is a secure virtual space that serves multiple essential functions:
- Confidential data storage and sharing
- Secure collaboration and communication with people inside and outside the company
- Digitalization of the company’s workflow and dealmaking
The decision to purchase data room software is not usually specific to a position. Depending on the company’s size and segment, virtual data room obtaining and administration might be the responsibility of anyone from an office manager to the CEO.
The best virtual data rooms will guarantee 99.9% security. One way to confirm such statements is to check the data room provider’s standard certificates, such as ISO 27001, SOC 2, or SSAE 16.
A traditional data room is a physical space that contains large amounts of data. Typically, traditional data rooms have access restrictions and intensified security.
The main advantage of a virtual deal room over public-access cloud storage repository is security measures. A trusted data room will implement more strict protective protocols and monitor every user activity in detail. Plus, virtual data room providers often provide additional functions for making the user’s VDR experience more effective and convenient.
Virtual data room providers often use cloud technology to store users’ data, a data room is not the same as a public access cloud storage platform. The critical difference is the security measures featured in virtual data room software. For example:
- Two-factor authentication
- IP-based access restrictions
- Dynamic watermarking and fence view of the documents
- Adjustable restrictions on retrieving and sharing the data
- Various levels of access privileges
Data room software operates as an extranet that can be accessed via the Internet. Essentially, virtual deal rooms are highly secure document repositories with an option to modify data, communicate, and enhance the workflow from anywhere in the world.
Depending on your task, you can request a checklist of the items to include in the data room from the VDR provider. For example, virtual data rooms for Mergers and Acquisitions will need to feature sections like employee information, intellectual property documents, director board materials, financials, major contracts, and other documentation.
In case you have never used a virtual data room, the best data room providers will always have a training program in place. Depending on your company’s size and the overall technological literacy of all the VDR users, it might take anywhere from 15 minutes to a few hours to fully comprehend how to use the data room in your case.
Virtual data rooms ensure top-notch security and seamless collaboration during critical business transactions. VDRs improve and simplify the following activities throughout the M&A lifecycle:
- Due diligence
- Deal analytics
- Redaction of sensitive information
- Contract review
- Transaction service agreements
- Post-merger integration