VDRs

Virtual data rooms (VDRs) are secure online repositories that enable organizations to store, organize, and share confidential documents during sensitive transactions and processes. Originating as a digital alternative to physical data rooms used in corporate deals, VDRs provide controlled access, trackability, and collaboration features aimed at due diligence, regulatory review, and litigation support.

Key features include user authentication and access controls, role-based permissions, and granular document rights such as view, download, print, and forwarding. Advanced VDRs offer watermarking, redaction, and document versioning to preserve the integrity of sensitive material. They also provide audit trails and activity monitoring, Q&A modules, bulk upload and indexing, and structured folder hierarchies to support due diligence workflows. Security is reinforced by encryption of data at rest and in transit, secure file viewing, and configurable data retention and expiration policies.

VDRs typically conform to industry standards and regulations, including ISO 27001 and SOC 2, and often support data residency options, single sign-on, two-factor authentication, and IP restrictions. They allow revocation of access, time-bound invitations, and activity alerts to notify users of new documents or questions.

Common use cases include M&A and financing due diligence, corporate investigations, intellectual property management, and regulatory reviews. Users commonly include investment banks, law firms, corporate development teams, private equity firms, and auditors. The typical workflow involves uploading documents, setting permissions, inviting participants, managing questions and answers, and monitoring progress through dashboards and reports.

VDRs offer speed, scalability, and improved control over document exposure compared with physical rooms or ad hoc file sharing. Drawbacks can include ongoing subscription costs, setup time, and the risk of misconfiguration if permissions are not managed carefully. Selection criteria often emphasize security features, ease of use, integration with other tools, and support for the client’s regulatory and industry requirements.