What Is a Secure Virtual Data Room and Its Importance for MA Deals

Data protection is a matter of grave importance even after revolutionary advancements in digitalization. 

Millions of customers face data or identity thefts due to their personal negligence and insecure data management systems in organizations. In fact, not only customers but companies also suffer at the hands of hackers and pay millions of dollars in the form of penalties or their lost trade secrets. Most data thefts usually occur during data sharing in external business transactions like joint ventures, M&As, etc.

Virtual data rooms or dataroom software is a great counter-attack solution globally used by organizations, especially during financial transactions. The data room software is specifically designed to cater to the biggest threat in the business world — data security. 

Here is an introduction to secure virtual data rooms and why they are important for dealmaking.

What is a secure virtual data room?

A secure virtual or electronic data room is an online document storage, sharing, and management platform that complies with specific industry standards. For example, a virtual data room used for financial services and transactions in the USA must be FINRA-compliant.

As the virtual data room market grew, service providers started providing industry-specific services. That said, many data room services have M&A data room solutions designed specifically for mergers and acquisitions.

An M&A data room not only has data management features but is usually enriched with online collaboration tools such as:

  • Online meeting management tools
  • HD audio/video calling software
  • Chat messengers
  • Live polls
  • Q&A modules
  • Project management tools

You can read more about M&A data room service providers and their features here: https://www.idealsvdr.com/ma-data-room/.

What makes a virtual data room secure?

The security of the data room software is often compared with security systems in the banking sector and military. Here are some worth mentioning data room security features.

  • International cybersecurity standards compliance. All secure virtual data rooms comply with international and regional cyber security standards, including:
    • ISO 27001, 27081, etc
    • SOC2
    • GDPR
    • SSAE 16
    • FINRA
    • Safe Harbor international privacy practices
  • Data encryption. Most high-end modern-day virtual data rooms have 256-bit data encryption features. It encrypts not only the document but the data inside it. Thanks to it, data room users can store and share data in encrypted form.
  • Two-factor authorization. Two-factor authorization feature in the data room software requires any user to enter the correct password and an additional one-time generated code sent to the user’s email or mobile number.
  • Digital watermarking. Digital or dynamic watermarks are usually audio, image, text, or video embedded in any document as a stamp to claim ownership of the file. Dynamic watermarks also track the changes or alterations made in the file.
  • Audit logs. Audit logs or audit reports consist of detailed information on all virtual data room activities. Audit logs keep track of all login and logout details, files opened, changed, shared, altered, copied, printed, or deleted, and other minor or major activities in the VDR.
  • Remote device deletion. The virtual data room administrator can remove and purge any device from the VDR. That said, the management can delete or clear all VDR files (opened or downloaded) from any device logged into the data room. It is a handy feature to get rid of stolen or lost devices.
  • Customizable NDA. NDAs or Non-Disclosure Agreements, when signed by data room users, legally restrict them from misusing or disclosing sensitive information. Many data room vendors provide customizable NDAs, without whining which access to the data room cannot be provided.
  • Fence view. Fence view is a highly beneficial security feature when one business shares secretive data with external parties. It makes sure that no user can scan, edit, share, save, print, download, or take a photo or screenshot of any file.

Importance of M&A data room software

During mergers and acquisitions, each M&A data room guarantees the following.

Secure and centralized data storage

Virtual data rooms, being cloud-based data management platforms, allow companies to upload and organize their documents for mergers and acquisitions. A central repository makes sure that buyers or acquiring companies don’t have to look for company data in different places. The above-mentioned data room security features protect data from internal and external risks.

Remote access for everyone

Anyone involved in the transaction, including investors, buyers, sellers, shareholders, advisors, board members, etc., can access the data room and the files in it remotely. They can access it from their desktops, mobile phones, or tablets.

Seamless communication

Communication is a key element in mergers and acquisitions, and virtual data rooms allow everyone in the deal to communicate with ease and safety. All parties involved in the transaction can hold online meetings, live Q&A sessions, and communicate via chat messengers in VDRs.


Audit logs, a common feature in the data rooms, bring transparency to M&A deals undertaken in VDRS. Everyone in the data room has a clear picture of all the activities.

Final words

A secure data room software is a digital data storage management tool, mostly used for data sharing, online collaboration, and task management during M&As, fundraising, IPOs, real estate trading, and similar business undertakings.


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