Virtual Data Room Providers: from low-cost VDRs for startups to full-featured M&A solutions

Virtual Data Rooms (VDRs) have evolved to play a crucial role in the M&A process over recent years as dealmaking has grown ever more digitised. VDRs are now vital to making deals safer, smoother and quicker, enabling dealmakers on both sides to conduct transactions in a secure digital environment.

VDRs have become indispensable to many dealmakers for a variety of processes within M&A transactions, including due diligence, communication with the buying or selling party, collaboration with third parties such as legal teams and financial advisers and auditing.

Perhaps as important as any of these capabilities, however, is the security features that VDRs offer during the M&A process, amid ever-increasing awareness of data security and the threat of cybersecurity, with most VDRs featuring advanced security measures as standard.

The usefulness of VDRs is by no means limited exclusively to major companies and large deals either. While, until very recently VDRs were too cost-prohibitive to be accessible to micro and small businesses, an enormous range of third-party providers now offer VDR services at competitive rates. This means that VDRs are not only accessible to firms with the capabilities and financing afford them (or to develop their own in-house or dedicated systems), but can ensure professionalism, security and efficiency in even the smallest M&A transactions.

What is a VDR?

A VDR (in an M&A context, at least) is at its core extremely simple. In brief, it is a secure online platform in which dealmakers on both sides of a transaction, and often any third-party legal teams or advisers, can store, share and manage confidential documents, data and other information related to the deal.

Using data room technology, a VDR (usually delivered through a third-party cloud-based platform) will provide a controlled, organised environment for parties involved in a transaction to perform due diligence, exchange relevant information and ensure data security and regulatory compliance.

The ultimate aim of a VDR is to provide maximum security and ease-of-use in exchanging vital documents and data during a transaction, while enabling dealmakers from anywhere in the world to communicate and exchange information instantly and with far greater security than, for example, email, which run a considerable risk of leaks (not to mention miscommunication).

Core functions of VDRs in M&A

VDRs play several crucial roles in the M&A process, most notably in regards to due diligence process of mergers and acquisitions (M&A) transactions. VDRs act primarily as a centralised location for storing any relevant documents, such as financial statements, legal agreements, contracts, intellectual property records, employee records, and more.

Having all this data and information in a secure, central repository makes it easier and quicker for buyers and sellers to access and manage the mountains of documents that are required during the due diligence phase of an acquisition.

In an era in which data security is one of the primary concerns of any organisation and the risk of cybersecurity is constantly evolving, another of the key functions of a VDR is to provide robust security systems that can protect the confidentiality of the huge amounts of sensitive data and private documents that need to be exchanged during M&A deals.

Data rooms will have restricted access, enforced through the usual features such as passwords and passcodes and multi-factor authentication. Many VDRs also operate under the Principle of Least Privilege (a security policy in which users have only the minimum amount of access required to perform their work), with some parts even being inaccessible to people involved in the deal if the documents and data stored there are not relevant to their role. Watermark technology and encryption are sometimes used to prevent documents from being shared with or by unauthorised individuals.

VDRs also foster quicker, more direct collaboration across a wide range of M&A processes, such as reviewing and analysing documents, allowing parties to annotate and leave notes on documents instantly and get feedback or responses quicker, streamlining transactions, making them more efficient and shortening timeframes, something that can be particularly important during acquisitions such as distressed takeovers or for buyers operating in particularly competitive marketing processes.

They can also simplify communication, giving those involved in a deal one dedicated forums in which questions and comments can be easily directed to the relevant individual, without the need for piles of physical documents or unwieldy email chains that might exclude people that need to be kept in the loop.

Remote access is also a crucial advantage offered by VDRs, which can typically be accessed from any device providing the individual has authorisation and an internet connection. This can greatly increase efficiency and speed during transactions involving geographically disparate parties (such as cross-border acquisitions) and also helped facilitate a significant amount of dealmaking during the COVID-19 pandemic, when lockdown policies necessitated that dealmakers worked remotely and could not physically meet.

VDRs can also be instrumental in helping dealmakers keep track of transactions as they are happening, with many services offering control features such as tracking document changes and updates, helping all parties stay up to date with the latest versions of documents, whilst also providing their history and previous versions in the event that would be required (for example, if the deal came under regulatory scrutiny).

This extends to providing documentation on who has accessed or changed specific documents and when they did so, which, again, can be vital for compliance and accountability and ensuring that the due diligence process was performed thoroughly and with integrity.

Further aiding in ensuring regulatory compliance, most VDRs now offer compliance and reporting features as standard, tracking and documenting all activities that take place within the data room in case of scrutiny. This is a feature that also helps to provide recourse in the event that a dispute arises during the due diligence stage, later on in negotiation or even in the post-deal period.

Finally, VDRs can also deliver significant cost savings to the M&A process. While there are, of course, costs associated with using a data room via a third party provider, the increased efficiencies they deliver to the M&A process – primarily in terms of due diligence and communication – combined with the shortened timelines they can deliver can help to generate significant cost savings over the long run, while enabling both buyer and seller to realise value from the transaction far quicker.

Considerations for SMEs when choosing a VDR

The most important consideration when choosing a VDR is likely to be security, due to the sensitivity of the documents and data that will be exchanged during an M&A transaction. Businesses using VDRs to conduct M&A should look for features such as strong access control, secure file sharing functionalities that prevent leaks, document security, data encryption, multi-factor authentication and dynamic watermarking.

While this is likely to be of the utmost importance of any transaction no matter its size or the scale of the businesses involved, it is perhaps a particularly pressing concern for smaller businesses using VDRs to conduct M&A, due to the fact that they are likely to have limited IT and security resources themselves and because any potential breaches are likely to be more damaging to them.

Given that one of the main potential benefits of using a VDR is efficiency and speed, ease of use should also be a prime consideration. M&A transactions are often highly time sensitive and neither buyer nor seller wants to spend an inordinate amount of time getting to grips with software that is meant to facilitate a smooth, quick deal. Easy navigation, compatibility and accessibility across a range of devices and a non-complex, user-friendly interface will be vital in this regard.

For smaller businesses engaging in M&A, speed and efficiency may be even more vital, as the competitive dealmaking environment means that small buyers will need to capitalise upon any competitive advantage they can get.

Being able to go through the deal process quickly and effectively could be the difference between successfully completing an acquisition or being beaten out by a bigger, more cash-rich rival. Given their limited resources, VDRs can give smaller businesses a more streamlined M&A process, which could prove priceless in terms of closing deals more efficiently.

Another way in which VDRs can provide SMEs with a competitive edge in the M&A market is by boosting the professionalism of their image. While some smaller businesses may be inexperienced buyers, utilising a VDR during a transaction can demonstrate to the selling party that issues such as data security, confidentiality and compliance are being taken seriously.

User management should also be a prime consideration. Parties on either side of a transaction will need to be afforded granular access control levels to ensure they can correctly set permission levels for the various potential users, easily exchange and comment on documents, organise files and documents into the relevant areas and revoke or add new users or user privileges as required.

The ability to collaborate smoothly and remotely is another key attraction of VDRs, meaning that businesses should be on the lookout for tools and features that help to foster this. Features such as version control, synchronised viewing and notes and comments come as standard with many VDR providers and some increasingly offer dedicated Q&A features, enabling parties to troubleshoot any questions, issues or concerns that may arise.

As previously mentioned, VDRs are also incredibly valuable when it comes to compliance and legal issues, due to their audit trail features such as activity logs detailing who has accessed documents and when. Many SMEs operate in sectors with specific regulatory requirements and, as a result of their lack of in-house resources and the potentially fatal impact of regulatory breaches, could benefit greatly from utilising technologies that automate and simplify compliance.

Customer service is perhaps not the first thing that will come to mind for businesses considering a VDR, but solid customer service from a provider can be absolutely vital. If something pertaining to the VDR goes wrong during the transaction, this could have a significant impact on the deal itself if it is not remedied quickly and effective.

Reliable and responsive customer service is absolutely vital in the event that this happens and, reflecting the importance of this, many providers now offer 24/7 support and multilingual assistance. For SMEs seeking to close deals quickly and efficiently and working with a smaller in-house team, this kind of round the clock support may be worth the extra expenditure in the event of any hiccups.

Finally, and perhaps one of the most important considerations for a small business, is cost. Small businesses are not likely to have huge amounts of money lying around to pay for a VDR and may need to shop around in order to find a provider with prices or a pricing structure that works for them. Given the widely differing requirements and means of businesses involved in M&A deals, many VDR providers offer a range of pricing models and VDR offerings of various prices, as well as payment structures such as pay-as-you-go models.

Leading VDR options

1. iDeals Virtual Data Room

iDeals is a prominent player in the VDR industry, offering a wide range of features, from secure file sharing and collaboration to diligent support.


iDeals VDR grants robust security measures, including 256-bit encryption, two-factor authentication and 8 levels of granular access permissions.

It offers powerful project management tools, document tracking, and watermarks on documents.

Customisation is a key feature, with users able to customise their platform to their own brand guidelines, while content can be automatically translated into more than 90 languages.

It provides round-the-clock customer service in several languages, ensuring that queries get timely solutions.

Easy-to-navigate workflows and integration means that due diligence can be performed more smoothly, while complete audit trails can help to ensure deal compliance.

The system is highly versatile and accessible, with availability across all operating systems.


Some users report difficulties in uploading large groups of files simultaneously.

It's relatively costly, making it less viable for small businesses or short-term projects.

The VDR offers limited interface branding options

2. Merrill Corporation's DatasiteOne

Merrill DatasiteOne is a well-known VDR platform used across numerous sectors such as financial services, law, and real estate.


It provides a highly secure platform with dedicated security specialists available for consultation.

Merrill VDR has customisable features and an intuitive user interface, streamlining workflow.

Offers comprehensive audit trails to track document viewing and modifications.


Some users have mentioned that the process of setting permissions could be simplified.

The pricing model can be intricate, making it difficult for users to comprehend the actual value for money, and the provider does not offer a free trial.

3. Citrix ShareFile

Citrix ShareFile is appreciated for its robust file sharing capabilities, fostering a secure collaborative environment on a global scale.


ShareFile offers maximum file size limits higher than most providers, making it ideal for sharing large files.

Provides integration with popular tools such as Microsoft Outlook and Gmail, boosting the platform's usability and versatility.

Offers a clean, user-friendly interface which enhances the user experience.


It could offer more robust user-access controls.

Its pricing is relatively higher compared to many other VDR providers.

4. Intralinks Virtual Data Room

Intralinks allows users to control, manage and share sensitive information securely, making it a favorite for many financial institutions.

Pros:
It offers a high-security level, complete with advanced encryption, dynamic watermarks, and granular access controls.

Intralinks VDR features a user-friendly, customisable interface, facilitating easy and efficient navigation.

It provides real-time reporting and analytics, furnishing insights into users' behaviors and preferences.


Some users have mentioned inefficiencies in the file upload process.

Occasional lack of responsiveness of the customer service.

5. FirmRoom

FirmRoom proudly calls itself the fastest growing VDR, appreciated for its transparency in pricing and customer support excellence.


It offers an easy-to-use interface, requiring less time for users to get acquainted with the platform.

FirmRoom VDR presents features like data analytics, audit trails, and advanced search options.

Its customer support is available 24/7 and has been praised for its responsiveness and efficiency.


Some users have reported difficulties in using the download feature.

The lack of a mobile application makes remote access less convenient.

6. Ansarada

Ansarada is one of the leading choices for M&A VDRs worldwide, claiming that it has assisted in deals in 180 countries and helped transact over $1 trillion in M&A deals and procurement through its AI-powered platform, which aims to offer end-to-end deal management during M&A transactions.


Helpful AI Tools: Ansarada offers a range of artificial intelligence tools, including reporting, redaction, and uploading capabilities. These features can significantly streamline document management and enhance security.

Customisable Watermarks: The platform allows users to apply Customisable watermarks to documents, bolstering the protection of sensitive information and maintaining confidentiality.

Clean and Intuitive Interface: Ansarada boasts a user-friendly and intuitive interface. Its design makes it easy for both newcomers and experienced users to navigate the platform efficiently. This fosters quick user adoption and a shorter learning curve.

Built-in File Archiving and Zip Download: Ansarada includes built-in features for file archiving and zip downloads, simplifying data organisation and making it more convenient for users to access and manage their documents.

24/7 Customer Service Support: Ansarada offers around-the-clock customer service support. This ensures that users can receive assistance and resolve issues promptly, regardless of their time zone or working hours. It also provides email file-in and Q&A support, making it easier for users to interact with the platform and collaborate with others efficiently, such as during the due diligence process.

Product Updates Based on Customer Feedback: Ansarada actively listens to customer feedback and implements product updates accordingly. This commitment to improvement ensures that the platform evolves to meet the changing needs of its users.


Clunky Q&A Workflows: Some users may find that the Q&A workflows in Ansarada can be clunky and less streamlined than desired. This may lead to inefficiencies, especially during the due diligence process, where clear and efficient communication is crucial.

Small Upload Size Limits for Individual Files: Ansarada may have limitations on the size of individual files that can be uploaded. This constraint can be problematic for users dealing with large documents or datasets.

Short-Term Pricing Could Be Better: One potential drawback is that some users may find the short-term pricing of Ansarada to be less competitive or cost-effective than they would prefer. This can be a concern for those looking for more budget-friendly options.

7. Vault Rooms

Vault Rooms has been a leading provider of cloud-based virtual data rooms for more than 15 years and is a popular choice for business owners involved in financial transactions, exit planning and M&A, as well as for fundraising.


Highly Accurate and User-Friendly: Vault Rooms has been praised for its high accuracy and user-friendliness, making it a reliable tool for managing company data.

Efficient Document Management: Vault Rooms offers an efficient solution for managing a large volume of documents and controlling access rights for multiple users. It does so at a fair price, accompanied by excellent technical support.

Simplified Corporate Information Sharing: Vault Rooms simplifies the process of sharing corporate information with financial stakeholders. This is especially valuable when dealing with substantial data amounts, where sharing via email becomes impractical and potentially insecure.


Billing Timing Issues: Some users have reported billing issues, where they were billed as soon as the V-Rooms portal was created, even if the client was not ready or willing to pay for several months - This could prove highly damaging for SMEs involved in M&A transactions.

Inability to Open Multiple Windows: Vault Rooms lacks the capability to open multiple windows, making it challenging for users to compare multiple documents when they don't have download permissions.

Guest Login Email Problems: The data room manager has faced difficulties with new guests not receiving the login email, requiring time-consuming workarounds to resolve this issue.

Lack of New User Training Manual: Users have expressed a need for a training manual to help new users log into the program effectively, indicating a gap in user onboarding resources that could be costly during a time-sensitive M&A transaction.

After exploring these notable VDRs, it's evident that while all provide facilities for secure data exchange and collaboration, they have different strengths and weaknesses. Therefore, when selecting a VDR for your business, it's critical to align your needs with the features, pricing, and potential limitations of the platform. Ultimately, the choice of VDR should offer intuitive use, robust security, efficient communication, administrative controls, and responsive customer service to ensure a seamless, secure, and productive workflow.

VDR options for SMEs

Virtual Data Rooms (VDRs) are gaining popularity not only with large corporations but also with small businesses and start-ups. Recognising the need for more budget-friendly options, many VDR providers have entered the market with competitive pricing so that even small businesses can benefit from these platforms. Here are a handful of less expensive virtual data room services that provide a robust set of features suitable for smaller businesses:

1. SecureDocs Virtual Data Room

SecureDocs is known for its simple pricing structure and user-friendly interface, making it a favorite among startups and small businesses.


Offers a flat-rate pricing with unlimited users and no page or data caps.

Intuitive interface requires little to no training for users.

Provides robust security features including two-factor authentication and data encryption.


Lacks built-in editing tools for documents.

Customisation options are limited compared to some competitors.

2. Box

Box isn't a dedicated VDR service, but its affordable pricing and high-quality features make it a viable option for small businesses needing a secure document sharing environment.


Seamless integration with popular office tools like Office 365, Google Workspace, and Slack.

Provides robust security measures including data encryption and granular access controls.

Offers real-time collaboration and workflow automation features.


Its user interface can be overwhelming for newcomers.

Some advanced VDR features, like Q&A tools or custom watermarks, may be lacking.

3. DealRoom

DealRoom is a VDR provider that offers affordable solutions with an emphasis on M&A due diligence, but is versatile enough for various uses.


Provides a predictive-analytic feature for estimating project timelines.

Easy navigation with intuitive interface and drag-and-drop functionality.

Unlimited data storage and numbers of users.


Might lack some specialised features that other dedicated VDR services offer.

4. Onehub

Onehub is a straightforward and cost-effective VDR solution with a wide range of features suitable for small to medium businesses.


Security - Offers secure link sharing and role-based permissions for improved security.

User-friendly Interface - Intuitive user interface coupled with features like drag and drop, making it user-friendly.

Free Trial - Provides a free trial, allowing users to test the platform before committing.


Basic Features - Some features may be more basic compared to high-end, costly alternatives.

Basic Search - Advanced search features could be improved.

5. OrangeDox:

OrangeDox is a secure and efficient platform for creating Virtual Data Rooms (VDRs) and document tracking, making it a popular tool for businesses that require secure document sharing and collaboration during M&A transactions.


Document Protection and Tracking: Orangedox excels in delivering document protection and tracking, ensuring your confidential information remains secure. The platform combines this unique feature with an excellent user interface, offering a robust package for maximum compliance and protection.

Efficient File Sharing: Orangedox integrates seamlessly with Google Drive and Dropbox, making file sharing more convenient and efficient. You can confidently share data with authorised parties and monitor its usage closely, down to specific document sections viewed and download times.

Low cost: Possibly the cheapest VDR option around. $45 a month get you any number of files and datarooms. Analysis and Cataloging: Orangedox provides thorough analysis and cataloging of document access, allowing you to gain valuable insights into file usage.

Useful for Sales, Auditing, Finance, and Compliance: Orangedox's features cater not only to document protection but also prove valuable for sales, auditing representatives, and finance and compliance experts.

Secure Data Rooms: Orangedox's secure data rooms ensure that even among authorised participants, you can track who has correctly viewed the files, enhancing data security.

Strong User Experience: Orangedox stands out as a top-notch document management and tracking platform, delivering a superb user experience.

Cons:

Minor Integration Issues: While the overall user experience is excellent, some users have reported minor integration issues. These issues vary from user to user, suggesting that the platform's integration may not be entirely seamless for everyone.

Missing API Functionalities: Some users have noted the absence of certain API functionalities. This could impact the extensibility and Customisation options available to users.

Additional Features Concerns: While the core functionality of Orangedox works well, there have been some concerns raised regarding additional features and the overall design of the platform. These concerns do not affect its core functionality but may impact user satisfaction in terms of customisation and extra features.

Share this article

Latest Businesses for Sale

---

---

---

View more businesses for sale