Virtual Data Room (VDR) – Free virtual data rooms – Guide
What Is a Virtual Data Room?
A virtual data room (VDR), also known as a deal room, is a secure online repository for storing and distributing documents.
Typically used in pre-merger or pre-acquisition due diligence processes to review, share, and disclose corporate records.
Understanding Virtual Data Rooms
Virtual data rooms are replacing the physical data rooms traditionally used for document disclosure and sharing.
The globalization of companies and increased control to reduce costs have made virtual data rooms an attractive alternative to physical data rooms.
The virtual data room is accessible from anywhere, instantly available, and more secure.
As security concerns grow and incidents of security breaches increase, VDR vendors develop more sophisticated and reliable databases.
initial public offerings (IPOs), audits, partnerships, or other companies that need to collaborate and share information use virtual data rooms.
Uses of Virtual Data Rooms
Mergers and Acquisitions proceedings are the most common use of VDRs.
These repositories provide a location for the due diligence required when closing a deal.
These business transactions involve a large number of documents, many of which are confidential and contain sensitive information.
Using the VDR is a safe and reliable way for all stakeholders to review and exchange documents while participating in negotiations.
companies work together to manufacture and manufacture products and provide services, often in the construction of buildings.
Establishing and maintaining these business relationships requires contracts and frequent data transfers.
virtual data room ensures the safekeeping of these agreements and the quick availability of the documents necessary for the continuation
of the business partnership.
For example, changes made by an engineer to the plan of a structure are immediately available to all contractors involved in the project.
Business practices, compliance and account audits are common practices in all businesses.
This process is often problematic as workers need to interact with external regulators and recruiters.
Many companies today also have offices in remote locations and in different time zones around the world.
Free virtual data rooms
FirmRoom is a leading online data room which offers the essential functions of other VDR providers such as drag and drop, bulk file upload, and permission settings.
Awarded as a “Rising Star” by FinancesOnline, FirmRoom is taking the industry by storm.
Although they are most acclaimed for their M&A solutions, FirmRoom is suited to fit a wide variety of industries.
Renowned users include Pfizer, Baird, and J.P.Morgan.
Box is a low-cost VDR option that is slightly better than a standard file sharing software program like DropBox.
Box can be a good option for those with a smaller budget, however, there is a lack of security features, especially compared to higher profiled VDR programs.
Due to this, Box is not a great option for large stake business transactions.
Another cheap VDR program is called Dotloop.
While it does offer collaboration, auditing and data storage management, is it not a good option for managing M&A deals and transactions.
Dotloop lacks data protection and due diligence management. It is much better for geared towards agents and real estate brokers.
This VDR offers 24/7 customer service, due diligence management, and data protection, it still isn’t perfect for an M&A company.
The Clinked software misses completely with not being capable of handling role-based permissions or data storage management.
Koofr is headquartered in Slovenia, and is another inexpensive virtual data room software provider.
And they offer up to 2 GB of free storage.
One reason companies chose Koofr, is because of their ability to integrate with other cloud storage sites.
Another reason is that the plan, clean interface makes it easy for users to learn.
Unfortunately, Koofr does not offer collaboration features, and lacks features tailed to M&A and due diligence such as audit logs, watermarking, and analytics.
They also have minimal customer service support available.
Ftopia is a Paris based company and is used as a project repository, FTP server, and secure file sharing server.
Ftopia offers up to 10 users, 3 rooms, and 5 GB, for free.
They offer the most advanced features compared to other free VDRs including custom branding, permissions, collaboration, and audibility.
In terms of security, Ftopia has data encryption, intrusion prevention, automatic data redundancy, access-rights management, and SAS 70 Type II-certified protection.
However, this VDR provider isn’t designed specifically for M&A or due diligence.
Google Drive and DropBox are both two inexpensive or free file sharing software programs that can have its users sharing information in real time online through the cloud.
On Google documents, you’re able to leave comments and tag them to exact spots on the page for others to see.
For personal use, these programs and the capabilities that they offer are really great. For businesses, not so much.
The Best Virtual Data Room Service Providers Comparison
||M&A, Corporate Development||Yes. 14 days||$1250/mon annually|
||Small and Medium businesses||Yes. 30 days||$500/mon annually|
|Fordata||Small and Medium businesses||Yes. 14 days||$$|
|Merrill||Medium and Large businesses||No||$$$|
|SecureDocs||Small and Medium businesses||Yes. 14 days||$$|
|Sharefile||Small businesses||Yes. 30 days||$|
|Caplinked||Small businesses||Yes. 14 days||$$|
Alternative to a VDR
Virtual data rooms have many advantages, but they are not suitable for all industries.
For example, some governments may choose to continue using physical data rooms for the exchange of sensitive information.
The damage from potential cyberattacks and data breaches outweighs the benefits of virtual data rooms.
If sensitive information is accessed by blackmailers, the consequences of such events can be disastrous.
Using VDR is out of the question in such cases.
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