Virtual data rooms are a fantastic tool for businesses who need to share confidential documents with third parties. They allow the documentation to be accessed in a secure and easily, while also ensuring that it’s not accessible or copied. They are commonly used for corporate transactions, including purchases and mergers, as well as for funding processes.
Conducting an IPO for instance, requires a great deal of due diligence as well as the sharing of documents with the general public as well as shareholders. This process requires scrupulous control of the company’s documentation and is typically subject to additional local, state and federal rules and regulations. Virtual data rooms facilitate the process for businesses that are considering going public. They make sure that all the required information is accessible to the right people at the appropriate time.
Startups also use VDRs for securing investment, which requires a great amount of confidential documentation to be shared. This information is typically financial and includes historical and projected income statements as well as captables (including equity in options pool) and the relative allocations of founders. It is also commonplace to include a plan of action that outlines the strategic objectives of the future development of a business.
Board members of a company are heavily involved in business operations and must have access to all the necessary documentation. They are often scattered across the globe, and need a convenient platform for sharing and communicating documents with the stakeholders. A well-designed virtual dataroom should have features like drag-and-drop, bulk invitations, and watermarking.
