Most of the time, business deals fail due to the lack of collaboration between parties involved in the transaction. That lack of collaboration may include unresponsiveness or improper communication, inefficient data management or sharing methods, unavailability of the latest information, and so on.
However, it is also not possible to minimize these hurdles if a business keeps following old school practices, such as the use of paper documentation systems, communication via traditional routes such as emails, and setting inappropriate times for physical meetings. These impediments can be easily minimized using technologies like virtual data rooms.
Data room software is best known for streamlining business deals such as M&As, IPOs, capital raising, litigation, and other time and data-sensitive transactions. But how does a virtual data room do that? Read on to learn how online data room software streamlines deal management. You can also read about top virtual data room services on https://dataroom-providers.org/digify/.
Role of data room software in streamlining business deal management
Before understanding the role of electronic data room in deal management, it is important to understand what exactly online data room software is.
Virtual data rooms are cloud-based online data storage and collaboration platforms where a business can perform multiple functions. That may include business data storage and management, online communication, and deal management. Here is how a virtual data room does that.
1. It stores business data in one place
It is impossible to streamline business deals without having an efficient data management system. Data for decision-making is like food for the body.
Imagine if your company is involved in an M&A transaction and you still use a paper documentation system — it will create multiple problems for buyers or bidders. With that said, storing data in a traditional paper way causes numerous inconveniences. These include:
- The buyers will have to visit your company premises multiple times for due diligence.
- The document verification and analysis can only take place during office hours.
- You can only deal with one buyer at a time.
- A cross-border transaction may take months, which reduces the chances of completing it successfully.
- There will be problems in communication between your company and buyers.
However, what if you have a central data repository where you can keep all documents required for the transaction, and it is accessible from anywhere? That is exactly what data room software does — it acts as an online central document management platform that potential buyers can easily access from anywhere.
How can your company protect its confidential data if buyers can easily access documents online from anywhere? The data may be easily accessible, but you can decide who will be able to access your corporate secrets.
Thanks to electronic data room software, the administrators in VDRs can limit document access for data room users according to their roles. For example, if you don’t want buyers to copy a specific document, just activate the fence view mode on that file. It will prevent any user from editing, printing, copying, saving, downloading, scanning, or photographing that particular document.
Data sharing with virtual data rooms is simpler than you can think. You can create a document and tag concerned users or send them files in their inboxes. You can also share hundreds of files with multiple users at a time and set a document-sharing schedule (documents will be shared with intended users at a predetermined time).
3. It streamlines communication
Easy data access must be accompanied by real-time and uninterrupted communication between parties involved in the transaction. But luckily, data room software provides both services at a time. Any high-end modern-day virtual data room has multiple communication tools that make communication between sellers, buyers, and investors a whole lot easier and faster.
For example, the document annotation feature is useful in requesting explanations related to document content. Similarly, virtual data room software has a Q&A module feature that is designed explicitly for dealmaking. Using this feature, businesses involved in the transaction can arrange real-time Q&A sessions and get their questions answered in real time.
Data rooms have built-in chat messengers that can be used for one-on-one and group conversations. Messengers can also be used to share documents, arrange audio or video calls, and exchange messages.
Apart from that, a virtual data room can help organize online meetings between buyers, sellers, and stakeholders. From pre-meeting preparations to post-meeting task management, data room software can streamline everything.
5 best data rooms for deal management
Using fully-equipped and secure virtual data rooms is also crucial to make your business deals streamlined. Here are some of the best data rooms for deal management.
- iDeals virtual data rooms
- DealRoom deal room
- Merrill Datasite
- Intralinks data rooms
- Ansarada virtual data rooms
Virtual data room software streamlines business deals or transactions by automating three important sections — data management, data access, and real-time communication between buyers and sellers. Most importantly, it protects sensitive business data when shared. Consider using a data room if you have never used it before, and take your deal-making processes to the next level.