Due diligence is essential for all those involved in dealing with large volumes of sensitive files. Due diligence files are generally stored in cabinets that are only accessible to those who have physical access. This method doesn’t scale well when dealing with larger volumes of data or multiple transactions. A virtual data room (VDR) allows several interested Data Room parties to read and comment on sensitive documents without making copies that could expose confidential information. A VDR is typically utilized for due diligence in M&A transactions, litigations, bankruptcy, fundraising and audits.

The VDR’s file structure is simple to navigate and the files are organized based on type or project phase. The structure of the folders can be modified to meet the specific needs of projects and industries. The program typically comes with the default file index which reflects the due diligence checklist to help users locate the needed files quicker.

The VDR must have all security features required to ensure that no one can access sensitive data without permission. This includes 256-bit encryption, remote shredding, dynamic watermarks, restricted viewing mode and secure spreadsheet view, thorough activity tracking and antivirus protection. It should also permit you to restrict the ability to download and print documents and restrict the amount of time users can spend on a screen or document. Different providers have different security features, so compare their flexibility before choosing the best one.