Do you own a company or business? As your company grows and diversifies, you will be required to share sensitive company data with financiers and investors. By now, you have already discovered that virtual data rooms are the best options for sharing and storing confidential data. In this article, you’ll see the top things to consider before choosing a data room provider.
However, when it comes to corporate data sharing and storage and especially for major transactions such as mergers or raising capital for your business, you must select an experienced vendor with vast knowledge about your industry to ensure that you protect your information and your business.
Before you go out shopping for a virtual data room. Be sure to check out this Software Suggest’s Guide to Data Rooms so that you are well equipped to pick the best VDR that has all the features that you or your client will need for the business you are undertaking. Consider what the VDR provider designed the platform for specifically. But also look at the customer care service options and the price.
Here are 3 important things to consider before choosing a data room provider.
1. Strong Security Choosing A Data Room Provider
While security is often considered synonymous with a virtual data room. It is very important to always look for the highest security levels and especially if you are dealing with very sensitive data. Don’t risk placing your important information on the wrong platform. Before you consider a VDR provider, ask them if they provide security features. Such as data encryption, dynamic watermarks, two-factor authentication, SAS certifications, and data backups.
Additionally, ask the data room providers if they provide additional security features that are specific to your business. For example, if you do not want sensitive files to download. You can request the VDR provider to set the permissions so that no user can download and save the document on their computer.
- Encryption: Ensure end-to-end encryption, both in transit and at rest.
- Two-Factor Authentication (2FA): Adds an extra layer of protection for user logins.
- Granular Permissions: Controls who can access, view, download, or edit documents.
- Watermarking: Discourages unauthorized sharing by adding identifiable marks on documents.
- Audit Logs: Tracks all user activities for transparency and accountability.
- ISO Certification: Look for providers with ISO 27001 certification for information security management.
2. Pricing Structure
Pricing structures are very important for every business choosing a data room provider. Before you engage any VDR provider make sure that their pricing structure makes sense for your business. Once you receive your plan agreement. Read it carefully and look for any additional fees for extra features, storage, or users. Consider the monthly fee payable and the ongoing fees that you will have to keep paying once the initial contract expires.
Though VRRs do not require initial payment upfront, the vendors’ charges are usually very different. Especially when the deal takes much longer than anticipated. Make sure that you sit down with all the parties involved together with the VDR provider. So, agree on the pricing strategy upfront before engaging with a data room provider.
3. Support Choosing A Data Room Provider
During important business deals such as mergers and acquisitions, you and your employees will be required to work round the clock to succeed in business. during such times, you will need a VDR provider who supports you 24/7 too. The level of support your VDR provider gives you can make or break your business deal.
Ask your VDR provider if they can provide a dedicated project manager or a live support team to assist you appropriately and provide all the knowledge required to use the system during the period the merger is ongoing. If you are an international company and you feel that the language barrier might hinder your business, be sure to ask the VDR provider if they provide support in other languages if necessary.
4. Define Your Specific Use Case
The first step in selecting a data room provider is understanding why you need one. Different providers specialize in various industries and use cases, so it’s crucial to match their capabilities with your requirements.
Common Use Cases for Data Rooms
- Mergers & Acquisitions (M&A): Facilitates secure due diligence and document sharing.
- Legal Proceedings: Stores confidential case files and enables secure collaboration.
- Fundraising and IPOs: Share sensitive financial data with potential investors.
- Board Communication: Ensures confidential board materials are distributed securely.
- Real Estate Transactions: Manages property documentation and contracts.
By identifying your specific needs, you can narrow your options to providers that excel in your area of focus.
5. Check Integration Capabilities
Your data room shouldn’t operate in isolation in today’s interconnected business landscape. Check if the provider integrates with your existing tools to streamline workflows.
Popular Integrations
- Email Platforms: Sync with Gmail or Outlook for seamless communication.
- Project Management Tools: Integrate with Trello or Asana to track progress.
- CRM Systems: Ensure compatibility with platforms like Salesforce for smooth client management.
- Cloud Storage: Sync with Dropbox, Google Drive, or OneDrive for easy file transfers.
A well-integrated data room ensures efficiency by reducing manual tasks and simplifying data sharing.
6. Consider Compare Pricing Models Before Choosing Data Room
Cost is a significant factor in choosing a data room provider, but it’s important to look beyond the price tag. Different providers use various pricing structures, and understanding them can help you find the best value for your budget.
Common Pricing Models
- Per Page: Charges up on the number of pages uploaded.
- Per User: Charges present on the number of users accessing the platform.
- Flat Rate: Offers a fixed monthly or annual fee regardless of usage.
- Usage-Based: Charges based on storage size or data traffic.
Evaluate the features included in each pricing tier and ensure there are no hidden fees. Opt for a provider whose pricing aligns with your project’s scale and duration.
