Virtual data rooms are an excellent tool for companies who want to share confidential documents with third parties. They allow documents to be accessible securely and easily, while also ensuring that it’s not accessible or copied. They are employed for corporate transactions, like purchase and mergers or even financing processes.
For instance, executing an IPO requires lots of due diligence and document sharing with both the public and shareholders. This requires a meticulous management of company documents and is usually subject to additional state, local and federal rules and regulations. Virtual data rooms facilitate this process for companies that are planning to go public. They ensure all the necessary information is available securely to the right people at the appropriate time.
Startups also use VDRs to secure funding, which requires a great amount of sensitive documents to be shared. This type of information is usually financial and includes historical and projected income statements and captables (including equity pooled from options), as well as the relative allocations of founders. Additionally, it is common to include a roadmap with goals for the future growth of the company.
The members of a company’s board are heavily involved in business operations and must have access to all documentation. But, they’re often scattered across the globe, and require a convenient way to connect with one another and share documentation with all stakeholders. A good virtual data space will offer features such as drag-and-drop upload bulk invitations, dynamic watermarking, auto index numbering, and many more to ensure that this process is quick and easy for all participants.