Data Room

Data Room

Data Room

INFORMATION - Data rooms are spaces used for housing data, usually of a secure or privileged nature. They can be physical data rooms, virtual data rooms, or data centers.They are used for a variety of purposes, including data storage, document exchange, file sharing, financial transactions, legal transactions, and more.

In mergers and acquisitions, the traditional data room will literally be a physically secure continually monitored room, normally in the vendor’s offices (or those of their lawyers), which the bidders and their advisers will visit in order to inspect and report on the various documents and other data made available. Often only one bidder at a time will be allowed to enter and if new documents or new versions of documents are required these will have to be brought in by courier as hardcopy. Teams involved in large due diligence processes will typically have to be flown in from many regions or countries and remain available throughout the process. Such teams often comprise a number of experts in different fields and so the overall cost of keeping such groups on call near to the data room is often extremely high. Combating the significant cost of physical datarooms is the virtual data room, which provides for the secure, online dissemination of confidential information.

A virtual data room (VDR) is essentially a website with limited controlled access (using a secure log-on supplied by the vendor/authority which can be disabled at any time by the vendor/authority if a bidder withdraws) to which the bidders and their advisers are given access. Much of the information released will be confidential and restrictions should be applied to the viewers' ability to release this to third parties by forwarding, copying or printing. Digital rights management is sometimes applied to control information.

Detailed auditing must be provided for legal reasons so that a record is kept of who has seen which version of each document.

Data rooms are commonly used by legal, accounting, investment banking and private equity companies performing mergers and acquisitions, fundraising, insolvency, corporate restructuring, and joint ventures including bio-technology and tender processes.

Virtual Data Room

Virtual Data Room

Virtual Data Room

INFORMATION - A virtual data room (sometimes called a VDR) 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.

An alternative to the physical data room involves the setting up of a virtual data room in the form of an extranet to which the bidders and their advisers are given access via the internet. An extranet is essentially an 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.

In the process of mergers & 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. Confidentiality is paramount and strict controls for viewing, copying and printing are imposed. Conventionally this is 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. This becomes time consuming.

A virtual data room is designed to have exactly the same strengths as a conventional data room: controlling access, viewing, copying and printing as well as setting time limits on viewing and logging. It has none of the disadvantages of being in a standard, physical location, needing couriers to move documents or transporting of key staff and personnel back and forth. It is also accessible 24/7 over the allowed period. With a virtual data room, documents reach the regulators and investors in a more efficient and timely manner. Do to their efficiency, a growing number of businesses and industries have moved to using virtual data rooms instead of physical data rooms.