31 August, 2023

In an increasingly digital world, businesses are finding innovative ways to streamline their operations and enhance their efficiency. One such innovation that has gained significant traction is the virtual data room (VDR). A virtual data room is an online platform designed to securely store and share sensitive documents, making it an invaluable tool for various industries, including mergers and acquisitions, legal proceedings, due diligence, and financial transactions.

Understanding Virtual Data Rooms

A virtual data room is a digital repository for sensitive and confidential documents that replaces the traditional physical data rooms used for due diligence and document sharing. It offers a secure and controlled environment where authorized parties can access and review documents without the need for physical presence. Virtual data rooms are equipped with robust security features such as encryption, user permissions, watermarks, and activity tracking to ensure the confidentiality and integrity of the documents.

virtual data room usage

Steps to Use a Virtual Data Room Effectively

1. Choose the Right Provider

Because all projects are different, selecting the right virtual data room provider is crucial. Research and compare providers based on factors such as security features, ease of use, customer support, expertise in your industry, and pricing. Look for a provider that aligns with your specific needs and industry requirements.

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Advanced VDR Features

  • Remote Shredding: Revoke a user's right to view a document even after it's been downloaded.
  • Granular Access Controls: Customize document security policies per folder, per user, per group, and more.
  • Secure Printing: Prevent users from printing to PDF, even if printing to physical printers is allowed. This provides an additional security countermeasure since printing to PDF is the equivalent of being able to save a high fidelity digital copy of the document.
  • Dynamic Watermarking: Administrators can automatically apply customized, dynamic watermarks to each page of protected documents and spreadsheets, as well as to protected videos. Watermarks are clearly visible, applied diagonally across the page or screen, yet do not interfere with the readability of the underlying text. The watermark text is customizable, and admins can embed the following dynamic information:
    • User's email address
    • User's IP address (only with ShareVault Pro and ShareVault Enterprise)
    • Current date
    • Current time
    Watermarking provides a clear indication to the reader that the content is confidential, and since the user identity can be included in the watermark, it allows for a simple but effective deterrent against distribution of the printed documents to unauthorized readers.
  • Expiration Date and Time: Policies can be configured to expire file permissions either on an absolute date or after a relative delay (number of days) from the date / time the files were uploaded. After expiration, the corresponding users will no longer be able to access files to which the policy has been assigned. The expiration feature allows administrators to automatically enforce deadlines associated with the project. Using this feature in combination with Information Rights Management (IRM), means that even documents that have already been downloaded cannot be opened after expiration.
  • Disable Print, Save, Copy/Paste, and Screenshots: VDRs with fully-configurable file security policies, allow admins to define the appropriate levels of file protection. For each policy, admins can specify whether or not users have the right to print, save, copy/paste text, capture the screen, and which, if any, watermark should be applied.

2. Upload Documents

After securing a virtual data room service, the project administrator can start uploading documents. Documents should be organized into folders with clear naming conventions for easy navigation. Common types of documents stored in VDRs include financial statements, contracts, legal documents, intellectual property information, HR records, and more. Sometimes the buying organization will provide the seller with a comprehensive due diligence checklist specifying exactly what information they want to see in the data room.

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3. Set User Permissions

Virtual data rooms allow administrators to grant different levels of access to various users. Administrators should determine who should have access to specific documents and folders, and assign appropriate permissions such as view-only, download, or print. This ensures that confidential information is only accessible to authorized parties. VDRs also make it easy for administrators to broaden permissions as the project progresses and new levels of access are required.

virtual data room users

4. Maintain Document Version Control

As documents are reviewed and updated, it's important to maintain version control to avoid confusion. Most VDR platforms provide features that allow administrators to upload new versions of documents while preserving access to previous versions. Some VDR providers also feature powerful connectors to popular consumer-grade file-sharing platforms such as Box, Dropbox, Google Drive, Microsoft SharePoint and OneDrive. These connectors include a powerful sync engine, so the VDR content is automatically kept up-to-date whenever the source files or folders are added, modified, renamed or deleted. Admins can even add eSignature workflows from right within the VDR using a Docusign connector.

5. Facilitate Collaboration

Virtual Data Rooms are not just for storage; they also facilitate collaboration among authorized users. Users can leave comments, annotations, and questions on documents, which helps streamline communication and reduces the need for back-and-forth emails.

Some VDR platforms feature secure collaboration modules for the distinct purpose of redlining documents such as legal contracts or employment agreements. As the contract proceeds through multiple iterations of negotiations among multiple stakeholders, a comprehensive audit trail of all changes and edits is maintained.

6. Monitor User Activity

VDRs often come with activity tracking features that allow administrators to monitor user interactions within the platform. This includes a comprehensive audit trail which records every user login, agreement clickthrough, video watched or document viewed, printed or downloaded, with comprehensive specificity. Administrators can trace the chronology of activities by user and gain insights into their interest level and what they care about. This level of monitoring user activity adds an extra layer of security and accountability.

7. Data Room Q&A

Some virtual data room platforms offer a Q&A module that enables users to ask questions related to specific documents and get answers from designated experts. This feature can help consolidate communication and ensure that all parties have access to the same information. When the project is finished, a comprehensive audit trail of all questions and answers remains preserved, providing valuable information for regulatory compliance.

virtual data room questions

8. Secure Document Sharing

When sharing documents outside your organization, ensure you use secure methods. Avoid emailing sensitive documents directly and instead use the VDR's secure sharing features to maintain control over document access.

9. Prepare for Closing

If you're using a virtual data room for a transaction, be sure to prepare for the closing process. Ensure that all required documents are in order, and finalize any outstanding matters before formally closing the transaction.

10. End of Project

Once the project or transaction is complete, admins can choose to archive or close the virtual data room. Archiving preserves the data for future reference, while closing the VDR restricts access and ensures that no further changes can be made.


Virtual data rooms have revolutionized the way businesses handle sensitive information, offering a secure, efficient, and collaborative environment for document storage and sharing. By following these steps and best practices, you can effectively leverage a virtual data doom to streamline your operations, enhance collaboration, and maintain the highest levels of data security. Remember, selecting the right provider and understanding your specific needs are crucial steps in ensuring a successful virtual data room experience.

ShareVault has been providing organizations of all types and sizes with secure document sharing solutions for over 15 years.

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