Let’s explore how we got to this point. Before computers, deal rooms were physical rooms used for swapping documents during mergers, acquisitions, and fundraising.
Data rooms then took the concept of secure document exchange to the next level with features like encryption and access control, making the process digital. But people still often had to go to a place to access them.
Now, online VDRs are the preferred method of secure data sharing. They combine the best of deal rooms and data rooms, with several new and more secure features like watermarking and granular user permissions, keeping files secure—all while avoiding the need for a physical space at all.
It can be a little confusing at times, and when you’re thinking about data security, it’s good to understand what all these terms mean. See below for a simple glossary.
Table of contents:
- Deal rooms
- Data rooms
- Virtual data room (VDR)
- Other related terms
- Benefits and uses
What is a deal room?
Before the digital era, deal rooms were the original way of doing business deals. They were physical rooms, where all the important documents were stored during big-deal negotiations.
It was the low-tech method for business confidentiality. People would gather, sift through stacks of papers, and make agreements based on those documents.
Because they require a brick-and-mortar physical space, the presence of individuals in the room, and lock-and-key security measures—deal rooms in the traditional sense are rare today.
What is a data room?
A data room is the first digital iteration of this concept. It’s an online space where you store all of the important documents for a deal—contracts, financial statements, and all the rest.
But it’s much more flexible. You can have different sections for different things—like a deal room for a merger, or a due diligence room for a big investment.
You can even have a compliance room for keeping everything okay with legal. It’s essentially a digital one-stop-shop for all of your sensitive documents, set up however you need it.
What is a virtual data room?
A VDR is a step up from a digital data room as it’s more advanced and secure with online access. With top security, iron-clad encryption, and other features to keep documents safe.
It’s the best option for business deals like big mergers, acquisitions, legal processes—and anything that involves a large number of stakeholders.
When you’re dealing with high-stakes transactions, you need a virtual data room to keep your data safe—and the deal on track.
Other related terms
Here are a few definitions for other data protection terminology available in tools like DocSend:
- Secure sharing: This refers to features and best practices like sharing with a link (to avoid email attachments), adding passwords, expiration dates, or implementing access controls.
- Filigrana dinamica: A feature of cutting-edge VDRs, watermarking is great when you need to share with the utmost confidentiality. It’s a digital ID stamp to keep prying eyes away.
- eSignatures: When lots of important documents need signing, eSignatures allow you to sign in a few clicks. The best VDRs let you add NDAs to any document too, so they’re legally secure.
- Dati analitici sui documenti: Keeping tabs on your documents gives you insights into how your files are performing. Got 80/100 documents signed? See it all at a glance with analytics.
Benefits and uses
So, where are these deal rooms, data rooms, and VDRs traditionally used? They could be used almost anywhere, but they’re vital for business activities such as the following:
- M&A
- Ricerca di finanziamenti
- Due diligence
- Legal and regulatory compliance
Whether you’re in these sectors or not, DocSend combines security with collaboration features that will have your team working together on documents much more efficiently.
Deal rooms, data rooms, and virtual data rooms explained
People who experience the power of our VDRs love how it enhances their speed and productivity during any kind of deal or agreement. See what one happy person says about it below:
“Our data room brings all investors together in one well-organized place. DocSend’s eSignature tool is the key that unlocks the door to this room.”
Chris Boncimino, Co-Founder, Flow Networks
If you want to experience the unparalleled security and seamless document exchange offered by VDR features in DocSend, you can try it for free now.
