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What is Virtual Data Room mean?
A virtual data room (sometimes called a VDR or Deal Room) is an online repository of information that is used for the storing and distribution of documents. In many cases, a virtual data room is used to facilitate the due diligence process during an M&A transaction, loan syndication, or private equity and venture capital transactions. This due diligence process has traditionally used a physical data room to accomplish the disclosure of documents. For reasons of cost, efficiency and security, virtual data rooms have widely replaced the more traditional physical data room.
A virtual data room is an extranet to which the bidders and their advisers are given access via the internet. An extranet is essentially a website with limited controlled access, using a secure log-on supplied by the vendor, which can be disabled at any time, by the vendor, if a bidder withdraws. Much of the information released is confidential and restrictions are applied to the viewer's ability to release this to third parties (by means of forwarding, copying or printing). This can be effectively applied to protect the data using digital rights management.
The virtual data room provides access to secure documents for authorized users through a dedicated web site, or through secure agent applications.
In the process of mergers and acquisitions the data room is set up as part of the central repository of data relating to companies or divisions being acquired or sold. The data room enables the interested parties to view information relating to the business in a controlled environment where confidentiality can be preserved. Conventionally this was achieved by establishing a supervised, physical data room in secure premises with controlled access. In most cases, with a physical data room, only one bidder team can access the room at a time. A virtual data room is designed to have the same advantages as a conventional data room (controlling access, viewing, copying and printing, etc.) with fewer disadvantages. Due to their increased efficiency, many businesses and industries have moved to using virtual data rooms instead of physical data rooms. In 2006, a spokesperson for a company which sets up virtual deal rooms was reported claiming that the process reduced the bidding process by about thirty days compared to physical data rooms.
A virtual data room is a key prerequisite for automation of tasks in the due diligence process.
referencePosted on 25 Oct 2024, this text provides information on Miscellaneous in General related to General. Please note that while accuracy is prioritized, the data presented might not be entirely correct or up-to-date. This information is offered for general knowledge and informational purposes only, and should not be considered as a substitute for professional advice.
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