If a company is preparing to raise funds or enter into a merger or acquisition, due diligence requires an extensive review of a lot of sensitive documents. These include financial records, legal agreements documents relating to intellectual property and contracts. The ability to efficiently share and manage all these documents with the appropriate parties can significantly accelerate the process of negotiating and ensure confidentiality.
A virtual data room (VDR) is secured and encrypted online repository that enables multiple parties to view, access and share confidential documents at any time. VDRs eliminate the need for physical storage of sensitive documents which is costly and time consuming. These data rooms are distinct from the traditional file sharing tools. They offer features such as permission settings, auditing abilities and watermarks that prevent the alteration of documents or leakage of information.
Virtual Data Rooms can accelerate the process of getting ready to raise funds or finalize an agreement. By allowing investors to have easy access to a complete and organized collection of documents they can make an informed investment decision. Utilizing a VDR can also reduce the time it takes to complete due diligence.
Founders who are looking to raise funds can upload budget projections, IP ownership documentation and detailed financial records to their VDR. These can be viewed by potential investors with an elevator pitch and a company overview. This will reduce the time required to conduct due diligence and increase investors’ confidence.
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