Mergers and acquisitions, or M&As, are complex transactions that deal with sensitive information that could be harmful if mishandled. In the past, documents necessary for M&A deals were exchanged through physical means such as courier, mail, or fax, which increased the risk of security breaches. With the rise of digital technology, documents can now be shared electronically in secure virtual data rooms (VDRs).

Virtual Data Rooms and Data Security

Virtual data room software has become a secure platform for M&A deals. One reason for this is the accessibility VDRs provide. A VDR can host M&A documents in an online cloud, allowing them to be organized, shared, and viewed securely by authorized parties from almost anywhere. On top of their convenience, VDRs are designed to protect against cyber threats such as data breaches, cyber-attacks, and theft. VDRs offer several data security advantages over traditional file-sharing methods. Here are a few of the benefits you may experience when using data rooms for M&A processes:

Reduced Document Exposure

VDRs eliminate the need for in-person meetings and document exchange, limiting the opportunity for documents to be handled by unauthorized parties. The same accessibility that makes VDRs convenient for M&A participants also helps protect their data. Documents can be sent straight from the device they were drafted to the VDR, ready for review. This also functions as a cost-saving measure, making it a unique feature.

Conventional Digital Security

Just as physical data rooms are secured with a lock and key, VDRs have conventional measures to protect data. This type of security begins with password protection, which can be combined with multifactor authentication. VDRs also encrypt uploaded documents so that even an improperly downloaded file is saved.

Personalized Protection

On top of standard security features, quality VDRs offer a variety of customizable tools for data security. VDR administrators are often equipped with access controls that allow them to tailor certain users' access to various documents. The limits can be broad and organization based, or they can restrict access based on individual credentials. VDRs admins can also create expiration dates on papers so that they are only accessible during necessary periods of the M&A process.

Automated Updates

Because the M&A process often involves shareholders and regulators, so VDRs can also be equipped with reporting features. These make it easy to generate reports about the progress of the deals and any changes in documents needed or shared. They offer greater transparency and collaboration as all parties involved in the M&A deal can access and review papers in real-time. Many VDRs also feature audit trails that record when documents are accessed and by whom, making it easier to protect data.


Certain virtual data room providers also offer certified security measures. Look also for VDRs accredited by reputable third-party organizations such as ISO 27001 or SOC 2, confirming that the provider's security is up to industry standards. Other certifications to look for in a VDR provider include SRI, HIPAA, and HITRUST.

External Data Security

VDR security can significantly protect your business, and protecting VDR log-in credentials is one of your first lines of defense. VDRs can go a long way toward protecting data security during M&As, and those tools can be combined with other methods for further protection. Regular security audits, training employees on security best practices, and implementing multifactor authentication on in-house systems can make your data safer during M&A transactions.

Trust Data Rooms for Your M&A Transactions

Data breaches can have severe consequences for companies involved in M&A deals. They can lead to financial losses, damage to reputation, and even legal action. VDRs are worth their value alone for helping to avoid breaches and related consequences.

As secure platforms for exchanging sensitive information, little can compete with the VDR in modern M&A transactions. Data rooms' convenience and streamlining of the M&A process enhance that value. If your company is exploring M&A opportunities shortly, consider a VDR for your document exchange. Various data room providers with options that can be tailored to your needs are available and ready to help you get started today.