If you’re considering investing in an SaaS product to compile, share and sign files easily — especially for sensitive financial information — you may wonder whether you should use a transaction room or virtual data room (VDR) for file sharing. Understanding the difference in the technology, features and scenarios when choosing a VDR over a transaction room can help you increase your organization’s productivity and complete sensitive tasks with the right level of security. Here’s what you need to know.

A VDR May Have Higher Security Standards Than a Transaction Room

A virtual data room, sometimes called a virtual deal room, permits file transmission, sharing, review and signing for organizations that require the highest level of security. On the other hand, transaction rooms allow document signing on the simplest level. However, it may or may not protect your documents with the same security standards as a VDR.

Situations that may require a VDR rather than a transaction room include:

  • Due diligence before a merger or acquisition
  • Venture capital deals and corporate fundraising
  • Managing legal documents
  • Commercial real estate transactions
  • Audits

Simpler transactions such as signing scope-of-work contracts, residential real estate deals and some smaller personal loan transactions may only require the capabilities and security level of a transaction room. Additionally, you may be able to more easily print documents from a transaction room, while a VDR may not offer that capability in order to better protect the documents and provide a higher level of security for intellectual property, confidential files, and secure data. 

Industry-Recognized Security Certifications Provide Peace of Mind

When it comes to highly sensitive data being shared, VDRs must follow more stringent security standards than transaction rooms. Often, these certifications span multiple industries, allowing a VDR to serve customers across sectors, including the financial and healthcare industries. 

For example, Caplinked Virtual Data Rooms offer bank-level, enterprise-grade security that is also compatible with HIPAA regulations for those in the healthcare field. We hold ISO 27001 certification showing that our technology protects data digitally and physically under the most stringent international standards. We are also AICPA SOC 2 certified for the secure handling of financial information within a service organization. In addition, Caplinked carries the EU-US Privacy Shield and is accredited to be PCI SAQ-D and FISMA compliant. Transaction room solutions like DocuSign rarely offer this level of security — potentially putting sensitive information at risk.

A VDR Allows for Enhanced Collaboration

VDRs offer expanded flexibility to share and collaborate on documents. If you are putting together M&A due diligence, you need the capability for people within your organization to view, read and potentially edit documents and files. You can make changes securely within your VDR workspace without ever having to download files. 

Additionally, unlike a transaction room, VDRs allow the storage and management of different kinds of files. Most transaction rooms operate only with PDFs or a file format proprietary to their app. This makes transaction rooms less flexible as a way to share mission-critical information. VDRs even integrate with business productivity apps like the MS Office Suite. 

Track Changes for Enhanced Productivity

Transaction rooms offer convenience for “one-and-done” transactions, such as signing a contract for someone to complete specific work within a set time frame. But for larger projects like M&A due diligence or the compilation and review of legal documents prior to a court case, you need the flexibility to manage, share and make changes to documents — without having to use cumbersome plug-ins or download software. 

Version Control capabilities allow you to track changes made to a document. Each time you make a change, your VDR creates and stores a new version of the file, so there’s never any confusion about whether or not you are viewing the latest iteration. Your VDR Dashboard also shows recent activity to files. 

Communicate Within the VDR for Greater Security and Efficiency

As you’re working on financial reporting, due diligence or legal cases, questions may come up. Store a set of project FAQs within your VDR to keep everyone on the same page. You can also assign questions to one or more subject matter experts to clarify any uncertainties that may arise. 

Manage Your Project Within the VDR

A VDR not only provides secure document storage, but it can assist with project management, too.  

You can send notifications within the VDR, communicate securely via messenger within the app and notify stakeholders via email when changes have been made and are ready for review. Enhanced file and folder management makes it simple to keep track of documents. These project management and organizational tools can streamline tasks ranging from due diligence to financial reporting in your enterprise. 

Set and Withdraw Permissions Within a VDR

A VDR allows you to easily control who gets permission to view or alter specific files for enhanced security. You can even revoke access after it has been granted. Most transaction room apps do not allow this level of security management. 

Trust Caplinked When A Transaction Room Is Not Enough

A transaction room can provide the capabilities a business needs for simple contracts. But if you require bank-level security and encryption, project management and file storage capabilities, and the ability to collaborate on documents without downloading them, consider investing in a cloud-based VDR like Caplinked. Contact us to start your free trial today! 

Dawn Allcot is a full-time freelance writer and content marketing expert specializing in technology, business and finance.