M&A transactions involve tonnes of highly confidential information. It is imperative that this sensitive information must not fall into the wrong hands. So how can businesses safely store and maintain their data during M&A transactions, especially in the post-pandemic world?
One of the best ways to tackle all these problems is to use secure data room services. Virtual data rooms represent an online space where businesses can easily store their data or documents. In fact, data room software is immensely effective when it comes to securing business data during M&A transactions.
Why use virtual data rooms for M&A transactions?
Alright, this one is a legitimate question: why use a virtual data room for M&A transactions when there are other options available? For instance, you may be thinking, why not emails? Or other file sharing services? These options allow you to send, receive, and store data, so why virtual data rooms?
Well, emails or file-sharing services are prone to cyber-attacks and can easily be hacked. Research concluded that the email scams saw a massive rise (by 667%) during the global lockdowns in March 2020. Do you still think emails are the best way to secure the type of data involved in M&A transactions?
How secure data room services keep M&As safe
Thanks to secure data room features, sensitive data is safe and secure in the following ways.
1. By controlling communication
Communication is the key in M&A transactions. Whether it is the communication between M&A teams, stakeholders, investors, or other concerned parties, a smooth interaction is important. Before the Covid pandemic, face-to-face communication used to play a major role in M&A transactions. However, things have changed now, and online channels are more common.
The problem with emails and other similar channels is that they are not reliable. This is where virtual data rooms are very effective. Data room software offers a productive and secure place where M&A teams, investors, or stakeholders can easily communicate or share information or documents at any time.
Generally, high-quality virtual data rooms have encrypted chat functions that allow the users to communicate freely.
2. By controlling the data/document storage
Free channels are always very enticing, but they can be very problematic when businesses use them for M&A transactions. Basically, different service providers develop these free channels for domestic use. That is why they are not effective for enterprise-level transactions because they do not meet the security standards.
A virtual data room operates in a totally different way and allows you to store and control the documents or data with maximum security. In fact, it has various secure data room features that ensure bank-grade data protection. For instance, the two-way authentication feature almost nullifies the chances of password theft, and an irrelevant or unauthorized person won’t be able to access it.
Moreover, the audit logs are very effective in keeping an eye on all the documents, files, or user activity in the data room. Also, the authorized users can update the data or add comments to documents or attachments.
Apart from that, data room software boasts Q&A modules that are very helpful in building important Q&A information the users may need in the system. It means a user won’t have to create a separate Q&A Excel Spreadsheet and send it to other users.
3. By controlling access
Another excellent thing about virtual data rooms is that the senior management can set access limitations through the administration panel. Controlled access for different users not only gives flexibility but additional security as well.
VDRs’ controlled access features can help you in different ways. For instance, if any potential buyer wants to drop the deal, the administration panel can delete or remove that user easily. You can also give buyers access to the latest updates or new sensitive information.
Furthermore, virtual data rooms allow you to set different levels of access according to your needs. You can control who can or cannot see specific folders, documents, or Q&As. You can also set restrictions on who can print or download documents.
The takeaway
Free communication or storage software always looks tempting for M&A transactions. But a security breach can prove to be very costly. A virtual data room is an all-in-one option for M&A transactions. Check out some of the best data room providers out there and see for yourself just how reliable, secure, cost-effective, and convenient these solutions are.
