The data room market is growing and is expected to reach $3.6 billion by 2027. The reason for such rapid growth is businesses’ increasing preference for virtual data rooms due to their accessibility, security, and efficiency in managing and sharing sensitive information.
What features to look for when choosing a VDR solution? How much do providers charge for their services? And how to choose the right software? Find out in the article.
What is a virtual data room?
A virtual data room (VDR) is a secure online repository used for storing, sharing, and managing confidential information. It’s usually used during due diligence, M&A transactions, fundraising, initial public offerings (IPOs), and audits.
The key reasons companies choose to implement a VDR virtual data room in their business deals are:
- Security. Sharing confidential information like financial records, trade secrets, and customer information with multiple third parties is fraught with risks of data leakage. This is illustrated by the Yahoo and Verizon acquisition, during which two huge data breaches occurred and resulted in a $350 million price reduction.
- Cost savings. Virtual data rooms are much cheaper than physical storage since companies don’t need to pay for the rent of physical data rooms, courier services, printing, face-to-face meetings, etc.
- Efficient collaboration. Features like document comments, annotations, notifications, and Q&A enable multiple parties to work and communicate on documents simultaneously, speeding up the due diligence process.
- Compliance. VDRs help companies meet regulatory compliance requirements by providing audit trails and reports of document activities, which is especially crucial in several industries like healthcare and finance.
How much do virtual data rooms cost?
Virtual data room pricing varies among providers and is frequently determined by the pricing structure they offer. For example:
- Fixed plans (flat monthly fee). Fixed subscriptions are the most common among the vendors. Usually, they charge between $10 and $1,200 monthly, depending on the specific features and capabilities provided, the amount of data storage, the level of customer support, and the duration of use.
- Per-user. One of the oldest and simplest pricing structures is paying for the number of people using a data room. The cost varies between $2.5 and $120 per user per month.
- Per-page. The approach involves charging for the number of documents stored within the data room. The price ranges between $0.1 and $0.75 per page. This method is the least popular among the providers.
- Storage size. Some providers charge for the number of gigabytes the room uses. The cost, on average, is $100-400 per GB.
To determine the most suitable pricing structure for your business, begin by clearly defining your unique needs, and carefully assess your budget to ensure a cost-effective choice.
Key 8 virtual data room features
These are the most essential features for usage of data room for due diligence and other business transactions:
- Built-in redaction. The tool allows users to hide or remove sensitive specific information (such as personal data or financial details) within confidential documents. The redacted information is typically replaced with black bars, making it inaccessible to unauthorized users.
- Fence view. Due to the feature, users can only see the area of a screen where they hover their cursor, while the rest is hidden behind a barred screen. It protects confidential data against unsolicited viewing and prevents screenshot-taking.
- Dynamic watermarks. A watermark is a semi-transparent image or text overlaid on a document. It typically includes information like the user’s name and date of access. Dynamic watermarks discourage unauthorized sharing of documents, as it becomes easier to trace the source of a leaked document.
- Granular document permissions. Granular document permissions provide administrators with the ability to control who can access, view, edit, and download a specific document within the data room. This ensures that only authorized users can access the data and is particularly valuable when dealing with multiple parties.
- Full audit trails. An audit trail records every action in the data room and demonstrates who accessed documents when they accessed them, and what actions they performed. The feature is valuable during due diligence as it helps to determine what documents parties are most interested in. It can also provide critical information in the event of a security incident.
- Q&A. The feature allows users to ask questions and receive answers in an organized way. Usually, providers offer auto-assignment of questions to specific experts, so there’s no need to route them manually. This saves time and makes collaboration more efficient.
- Built-in Excel viewer with formulas. The tool is essential for transactions that involve processing of complex financial information, as it allows working with Excel formulas straight from the data room. This is more secure and convenient, as it eliminates the need for repetitive downloads and uploads.
- Bulk actions. Bulk document sharing, uploading, downloading, inviting users, and setting permissions streamline processes, speed up the performance of repetitive tasks, and boost overall efficiency, making it invaluable when managing big volumes of data.
How to choose a virtual data room provider
Follow these steps to find a provider that will suit your requirements and budget:
- Assess your needs. Begin by identifying your specific needs, such as the volume of data, number of users, and desired features.
- Compare providers. Research and compare VDR providers, considering factors like security, compliance, user-friendliness, and customer support.
- Request a trial. Many providers offer trial periods that help prospects thoroughly evaluate the platform’s compatibility with their specific needs. Catch this possibility before making a final decision.
- Check security and compliance. Ensure the VDR complies with relevant regulations like GDPR and HIPAA and offers security features, such as encryption, access controls, and audit trails.
- Review pricing. Carefully analyze pricing structures and contract terms to find a solution that fits your budget and timeframe.
To ensure secure exchange of sensitive information and effective completion of a business deal, leverage a virtual data room. The solution has become indispensable for numerous businesses of any size and industry.