Virtual Data Room

What Does Virtual Data Room Mean?

A virtual data room (VDR) is a secure, online repository for data and documents pertinent to business, legal transactions or proceedings. The VDR uses a central server and extranet connection, which is an Internet connection with very controlled access. This Internet connection uses a secure log-on supplied by the appropriate overseeing vendor or authority responsible for disabling or enabling, the secure log-on at any time.

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This term is also known as a virtual deal room.

Techopedia Explains Virtual Data Room

Initially, VDRs were only used by lawyers to meet with clients. Today, a wide variety of businessmen, attorneys and accountants also use them as a cost-effective and efficient methodology to view documents without need for physical copies or even a physical meeting room.

The virtual data room contains strictly confidential data and documents with restrictions and controlled access on viewing, copying or printing. Set times are scheduled for log-on and viewing the documents and data. A VDR allows documents to be accessed by regulators and investors in a timely manner during the allowed time period. With current document retrieval speed and efficiency, a VDR can pay for itself in a single M&A (merger and acquisition) transaction.

Physical data rooms, by comparison, are time consuming to administer, expensive to maintain, paper intensive and incur travel costs by all users. Virtual data rooms easily allows multiple bidders to have controlled access and actually result in 20 to 30 percent higher bid values than physical data rooms. Together with increased speed and efficiency of transactions, more secured information leads to more deals at higher prices. However in a true VDR, data may not be downloaded but may be viewed with appropriate permissions.

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Margaret Rouse
Technology Expert

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.