The value of virtual data rooms in mergers and acquisitions (M&As) can never be overemphasized. More and more companies are utilizing these secure platforms in the process of conducting due diligence on a potential financial transaction.
For instance, by 2022, the Virtual Data Rooms (VDR) industry is estimated to be worth $1.89 billion, compared to $900 million in 2017. The market has an estimated CAGR of just over 14.8% through 2022.
How Do Vendors Price The VDR?
There are two pricing schemes that service providers employ. You have per-page pricing and a fixed rate. As the name implies, you pay for each page that you upload, share, and access. This type of service is ideal for transactions that do not require voluminous data. You can save money when you only pay for the page that you include in the VDR.
In contrast, the fixed-rate can further be divided into two types:
- Size of the data room. You pay for the size of the storage of the VDR. For instance, you pay in increments of 5 GB, 10 GB, 50 GB, etc. The good thing is you do not have to worry about counting how many pages you have uploaded. The downside is that you pay for the storage you may not use.
- Fixed monthly rate. Another type of fixed-rate is the subscription basis. You pay the vendor monthly for unlimited storage or the number of authorized users accessing the data. Of course, this type of Virtual Data Room does not apply to everybody. If you think that the transaction will extend to a considerable amount of time, then this type of service would be ideal for you.
When you talk about VDR, there are mostly two types:
- Legacy VDR. The Legacy VDR is perfect for multi-million or multi-billion M&As because of their rich features and functionality. The success of mergers and acquisitions hinges on how well the parties involved protect the security of information. As you might expect, any leak about the possible transaction can send ripples on the stock market, especially if it involves mega-companies.
- Budget VDR. In contrast, budget VDR is more affordable for a reason. It pales in comparison to the Legacy data room when it comes to features. Nevertheless, it does not mean that the vendor will compromise security simply because you paid less.
Takeaways From The VDR
When you are dealing with potentially millions or billions in M&A transactions, you cannot cut corners. It is the reason why multinationals do not care about paying hundreds of thousands for the Deal Room.
Here are the major takeaways you need to look for in your VDR:
- Unlimited protected storage
- Access integration
- IP Access Whitelisting
- Virus scanning in real-time
- 24/7 support
- 99.9% uptime
- Customized onboarding and dashboard
- Full migration installation and assistance
- View documents, videos, and images without the need for plugins
- Track changes made to the files
- Digital Rights Management for optimum security
Ultimately, the VDR is easy to use, so you do not spend a lot of time training users on the features and functions of the deal room. For instance, you can set up the workspace in less than ten minutes, while you can access your workspace remotely from any device.