When Should You Use a Virtual Data Room?


 A virtual data room provides secure data exchange and storage in a private corporate cloud or within an organization’s perimeter. 

The main function of a virtual data room is to enable access to protected documents for authorized users via a specialized website, or via secure agent applications for Windows, macOS workstations, as well as Android and iOS mobile devices. 

The Data Room Feature

The data room software consists of folders and file structures that are filled with documents or files. For example, an investment banking team using a virtual data room for due diligence might create folders for legal, IT, HR, financial, and tax files.

Once the files and documents are in the room, they are in a secure environment so that different team members have access to them. And the level of access can be configured for different users.

Unlike FTP, which sends information unprotected, VDR uses E2E encryption with SSL or TLS that ensures maximum security of data exchange between the server and the agent, protecting them from MITM attacks.

Providers invest in online data room software security to make sure customer data is safe. 

At the same time, even provider companies do not have access to private data, source documents and files, nor do other people outside the room.  

Application Options for Virtual Data Rooms 

Virtual data rooms can be used anytime a company needs to share sensitive data with third parties.

This data must be well structured so that it adequately communicates the message of its owners to the third party.

They must be responsive so that the third party can make queries and notes in the data as they analyze it, which are automatically transmitted to the data owner.

Above all, it must be secure, ensuring that its integrity is protected.

Some of the most common uses of the best data rooms include:

  • Secure storage of valuable private data
  • Secure data sharing between internal and external stakeholders
  • Project management tracking (based on document sharing and updates)
  • Tracking shares, edits, and requests for individual documents
  • Providing an overview of document and folder access hierarchies

Data Room Fields of Use

Financial Sector  

Companies dealing with critical information are in dire need of a secure means of document delivery and data access rights control for branches and external counterparties.

Project Organizations

These companies are often faced with a situation where the workgroup needs to grant access to data for a certain period of time and be guaranteed to block access to documents upon completion of the project.

Communication Service Providers 

Telecom data room providers need tools to protect user information and label documents according to regulatory requirements.


Retail-related organizations need to protect data that is on merchandisers’ and sales representatives’ devices and may have commercial value.

All organizations need the most up-to-date protection and control over the distribution of information transmitted to outside parties. 

Purposes for Using Data Rooms

There are also a number of purposes for which companies use data room services, including:


Virtual deal rooms are often used during the due diligence phase of M&A as a place to post and share thousands of documents with various teams, such as potential buyers and sellers.


Companies can share confidential company information with potential investors when raising funds. Potential investors can access files, ask questions and upload their own information.

Strategic Partnerships

Potential partners can use virtual data rooms to give each other access to important files and data relating to each other. They can also set specific permissions so they know who has access to what. 

Board Communication

Teams can communicate securely in virtual data rooms about various aspects of the deal lifecycle. Teams can also secretly invite outside users to communicate in the room.

Secure File Sharing

You can compare virtual data rooms in terms of quality. But all virtual data rooms are used to store an unlimited amount of data. This includes many different types of files, such as documents, videos, presentations, and more.


Privacy and confidentiality are top priorities for consulting companies that need a controlled environment; VDR easily handles this.

A Few Real Cases of Need for a Virtual Data Room

If you exchange specifications, drawings or any other documents of commercial value with contractors or customers.

If you need to control a document even after it has already been sent and downloaded by a third party.

If your staff changes frequently, there is “turnover” and you want to keep some data secret even from your own colleagues.

Benefits of Electronic Data Rooms

VDR is the best solution for any business that wants to streamline document exchange and make it more efficient.  But here are more important benefits to look forward to using data rooms:

  • Sharing documents and critical business information
  • Protecting company information
  • Document management and secure data management
  • Providing access to multiple parties simultaneously
  • Support for mobile devices
  • Allow large data downloads
  • Precise search functionality

So, the most important advantage that you can get with a virtual data room is full control. Neither FTP, nor public storage can provide such an opportunity. Using DRM protection technology, it is possible to restrict access to the document even after it has already been outside the corporate network.

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