Mergers, acquisitions, and divestitures (commonly known as M&As) are long, complex, and data-oriented financial transactions. The buyer may want to analyze or verify different types of documents, which may result in repeat requests and tedious data sharing.

Usually, the due diligence takes weeks or even months, depending on the project and the unavailability of reliable online collaboration platforms. However, the introduction of virtual data rooms in due diligence and M&As has sped up the processes and removed inefficiencies to a great extent.

The following is an introduction to online data room software and how dealmakers can use it to streamline mergers and acquisitions.

What is an M&A virtual data room?

A virtual data room M&A is a certified, cloud-based, digital document storage and communication platform that dealmakers use to store, share, and exchange data in M&As.

Generally, the use of data room software has extended to different industries and processes. For example, the corporate sector, nonprofit organizations, and public companies use them for IPOs, capital raising, real estate, board communications, joint ventures, and remote collaboration.

The use of a virtual data room for due diligence and M&As started in the early 2000s. With time, virtual data room services have become more powerful and safer.

Importance of virtual data rooms in M&As

Data rooms, as mentioned above, minimize the inefficiencies in the due diligence process in different ways. Here is what VDR technology brings to M&As.

Increased data security

The average cost of a data breach has crossed $4 million in 2023. Target companies have to share their sensitive data with external parties. A data breach or leak during due diligence can trigger chaos in the form of lawsuits, penalties, reputation loss, and financial problems.

Virtual data rooms make sure that there are no data breaches or internal data leaks during the process. Their multi-dimensional security system prevents hacking attempts or unauthorized entries through a multi-step entrance process.

The seller exercises full control over its data with the help of features like document access control, remote device shredding, dynamic watermarking, and fence view.

Note: Fence-view feature is highly recommended for external data sharing as it prevents unsolicited viewing of the document.

Some of the best data rooms in terms of cyber protection include iDeals, Merrill, Caplinked, and Intralinks.

Less manual input needed

Using virtual data rooms, sellers can minimize the manual input needed. For example, they don’t have to share documents again. All they have to do is to create data rooms, define access settings for users, and invite them to the data room. Users can access required documents whenever they want. Also, virtual data rooms eliminate duplicate tasks and repeat requests.

Real-time communication

Different platforms for data sharing and communication consume time. A virtual data room for M&As means you don’t need an external tool for communication. Every high-end data room comes with built-in communication tools for meetings and individual communication.

VDRs have Q&A tools specifically designed for such transactions. These tools allow both sides to run a live Q&A session to answer queries in real-time. What’s more, VDRs also allow smooth integration with tools like Zoom, Slack, and Microsoft Teams for communication.

Transparency and remote access

As online data room software is a cloud-based platform, anybody can access it from anywhere. This feature is not only effective for buyers, but shareholders also benefit from it. They can stay updated with the process from anywhere they want.

What’s more, VDRs have audit logs that consist of every detail pertaining to every activity or transaction performed in the data room. That means any irregular activity can be easily traced, which keeps everything transparent.


Virtual data rooms are a super cost-effective option specifically for international mergers and acquisitions. That’s because they greatly reduce the costs attached to the transactions. These costs may include travel expenses, meeting expenses, and paper/printing/distribution costs.

How to choose an M&A virtual data room?

A virtual data room is a revolutionary technology only if you know how to choose the right service provider. Here are some important aspects to remember.


The importance of a secure data room is paramount when you have to share information with external sources. Try to get as many security features as possible and make sure that your vendor is a certified provider.


Every state or country has its own regulatory industry standards, and the data room vendors operating in a specific area must comply with them. Thus, make sure your service provider complies with your industry standards.


Virtual data room pricing is a vital element in the selection process. Do not choose per-page pricing if your transaction involves a voluminous amount of document sharing.

Parting thoughts

Virtual data room M&A is a cutting-edge document-sharing platform that allows buyers, sellers, and dealmakers to communicate and share data in M&As safely. It not only reduces expenses but speeds up the process.

Some of the best data room providers for due diligence and M&A include iDeals, Merrill, DealRoom, and Ansarada. However, to make a choice of an optimal solution, we recommend conducting your own data room comparison and research.

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