Virtual Data Rooms vs File Sharing Platforms

Virtual Data Rooms vs File Sharing Platforms

What is different of the Virtual Data Rooms & File Sharing Services?


If file sharing services like Dropbox and Google Drive are secure, why bother with costly Virtual Data Rooms ? It’s a pretty common question, especially with companies like Dropbox, who offer corporate plans.

Many people argue that it’s the technical security that sets VDRs apart, and yes—Dropbox did have a huge security mishap in 2011. But upon close inspection, Dropbox and other file sharing services use many of the same protocols as the best virtual data rooms. For corporate accounts, these file sharing companies also adhere to the same certifications and standards for information security as VDRs. So what are you paying for with a data room?


Virtual Data Room Security & Account Features

First of all, the security discussion is much more than encryption, SSL, and datacenters. As outlined in this article on virtual data room security , the more probable security issues are around user error. Obvious passwords, stolen devices, and confidential documents saved on personal computers are easier for data thieves to prey on than going through the trouble to hack into a secure system. With virtual data rooms, you can close these gaps with multi-factor authentication, dynamic watermarks, and expiry (self-destructing) documents. At the heart of the matter, file sharing services are just that—tools to help share files. In contrast, VDRs are all about having one centralized location of controlled documents.


Related. Essential Benefits of Virtual Data Room

Top Virtual Data Room Software – Reviews & Providers

             Why Companies need to Virtual Data Room?

Security aside, virtual data rooms are designed to streamline certain business transactions. User features, such as in-document linking or a Q&A; section, are important conveniences that speed up and could possibly change the outcome of a deal. Full text search is by far on one of the most useful, allowing scanned documents to be searched as if they were typed text files. This could save your team and your client/counterparty valuable hours, which is a win for everyone involved. Additionally, if you’re on the sell-side of a deal, many virtual data rooms are easily packaged up to transition important documents to the buyer when the deal is done.


The bottom line is that if you’re working on multi-million or even billion dollar deals, the few thousand that a VDR is going to cost you may be worth the peace of mind. You don’t want to be in the middle of a merger or IPO only to realize that you don’t have the right audit reporting set up. Beyond your own assurance, the reputation of certain virtual data rooms can also add a touch of confidence to your deal. The majority of VDRs are used for M&A; and IPOs, situations where i’s are dotted and t’s are crossed. Trying to force a file sharing system to meet the needs of a transaction could reflect poorly on your organization.