Document Control: The Importance of Virtual Data Rooms


Merger and acquisition transactions necessitate access to enormous amounts of paperwork detailing sensitive company information. To safeguard the interests of all involved parties, document control is of the utmost importance. This means establishing security protocol that all parties can agree on. Virtual data rooms can provide this essential security, additionally offering convenience and speed to the process as well.


What Is a Virtual Data Room?


A virtual data room is online software designed to securely hold digital documents. Authorized users can access it by logging into the system with an assigned username and password. The room itself is usually set up by a third-party that specializes in this type of software.


What Kind of Documents Are Held?


Nearly every aspect of a company’s dealings are on display during a M&A transaction. This transparency is essential for buyers to properly judge a business’s worth and make an informed decision about whether or not to proceed. Third-party auditors often require access as well to ensure that the information being presented is accurate and that all regulations are being followed. As a result, sellers must make a variety of documents available for review, including the following:


  • Legal data
  • Financial data
  • Company overview
  • Customer and client data
  • Employee data
  • Real estate data
  • Assets and equipment data


This data can contain sensitive material such as trade secrets and personal identifiable information. Allowing these to fall into the wrong hands can lead to irreparable harm, which is why access must be closely monitored.


What Does Document Control Involve?


Controlling your documents is really about controlling information. At its most basic level, you’re deciding who can access what material and what they can do with it. A virtual data room gives you the tools to do this through several integrated software tools.


User Access


Administrators can restrict user access on an individual basis. This not only keeps sensitive information from unauthorized eyes, but pares down the amount of documents users have to sift through.


Editing Privileges


Secure information control also means administrators can dictate who can upload, edit and delete documents. This eliminates the risk of documents being tampered with once inside the system.


Tracking and Notification


Virtual data room software commonly contains a tracking system that records who accessed what documents and for how long. This also includes any edits or notes made by users. Since uploads are generally ongoing even after the room goes live ”“ due to the volume of documents that have to be added ”“ notifications can alert all parties to newly uploaded documents.


Document Preservation


Having information control also means knowing where your documents are at all times. An online database guarantees that your documents aren’t at risk of being misplaced or destroyed. Copies can also be easily archived if necessary, to preserve them in the case of a natural disaster.


Why Choose Virtual Over Traditional Data Rooms?


If a physical data room essentially does the same thing as a virtual one, why opt for virtual? There are actually a few reasons why digital is quickly becoming the standard.




While a virtual data room does require an initial investment in the technology, it can save you money in the long run. You don’t have to worry about renting a space or paying for security, and you don’t have costs associated with traveling to and from said space.




Since documents are accessed via the internet, anyone authorized to view can do so whenever and wherever is most convenient to them. Because the secure document control software allows for notes and notifications, groups can communicate without necessarily being logged in at the same time. It also eliminates the need for multiple emails or texts, keeping all communications within one system.