Nevertheless, Wikipedia’s omnipotence is exaggerated – at least in its segment around corporations and solutions for corporations. It is difficult to expect completeness of information on specific topics from a virtual encyclopedia created by enthusiasts.
But when, in order not to overload the text, I wanted to preface the article with a short link to the Wikipedia article about VDRs, there was no description in the part worth giving here. However, this is not surprising.
Because if MA transactions, for the processing of which virtual data rooms were initially used, are definitely translated as mergers and acquisitions, then the due diligence procedure has no Russian translation at all.
What Is It?
So what is a VDR? This is a website, usually created for a specific period of time and for a specific purpose, which offers authorized users access to a secure document database according to their access rights and has a dealroom software.
For What Reason?
Initially, virtual data rooms were created as an alternative to physical data rooms during M&A due diligence.
Before the era of broadband internet access, getting acquainted with potential transaction participants with documents looked like this:
The seller allocated or rented a premises into which folders of paper documents were placed and recognized the rent or loss of profit from misuse of the premises as an expense.
A schedule was drawn up for visiting the room and working with documents for potential buyers (bidders), which, with their significant number, significantly increased the transaction time.
If the bidders came from another city or another country, their representatives were happy to go on business trips to world cultural centers and were reluctant to go to industrial regions, spent time on the road and money for increased travel allowances.
In fact, the VDR only solves the problem of time, price and easy access to documents.
Currently, virtual data rooms accompany the activities of companies in other areas, from providing information to partners of investment funds to obtaining certificates for medicines, that is, wherever it is necessary to make confidential information conveniently accessible for a certain period of time certain circle of people who may be thousands of miles away from a friend.
Comparison With Traditional Data Room
The traditional data room usually consists of one or more rooms filled with paper documents with a precise visit plan down to the minute. A virtual data room is a website that solves the problem of simultaneous access to documents and allows visitors with the appropriate rights to work with documents from anywhere and at any time.
The reader can compare the costs of renting and maintaining premises and the physical movement of employees in the space on the one hand and renting virtual space on the other. Because, however, and the cost of security.
In the first case, its requirements include ensuring strict control by “persons in civilian clothes” and the need to take into account the notorious human factor. In the second – virtual – there are ready-made technologies for data encryption and personalized access.
Although everyone decides the issue of safety for themselves to the best of their knowledge and belief. Well, the convenience of working with automated catalogs, reports and search engines is probably questioned only by avid fans of accounting sheets and fans of tactile sensations when in contact with paper.
Comparison With FTP Protocol
FTP – the old “comrade” who always helped out when it came to transferring a large file that did not crawl through e-mail, on the one hand fell victim to its own availability when information was transmitted in plain text, and not only from can be received by your addressee, and on the other hand the complexity of creating and managing accounts, which require significant IT skills.
Generally, you only have a specific “place” where “something” is stored with no ability to track versions, have discussions. These shortcomings are absent in the virtual data room (VDR).
Comparison With Other Tools
In principle, a similar database can be created on a company’s intranet portal, but creating an intranet portal from scratch takes much longer and costs significantly more than opening a virtual data room. For easy document caching, the corporate portal may have redundant features that at the same time require the attention and commitment of technical specialists.
Whether or not you allow strangers into your intranet depends on a particular company’s security policy.
Of course, no one canceled email, faxes, floppy disks, and flash drives. However, if you need to transfer large amounts of sensitive information on a regular basis, the advantages of a virtual room are obvious.
These include the lack of limitations on file size and encryption of information, as well as the ability to track versions of documents and provide timely feedback on specific documents. But the most important thing is the “magic formula” 24×7, with the ability to access information stored in a virtual space from anywhere in the world where there is electricity and the Internet.