Data security has become a big concern for businesses in a data-driven world. Luckily, data rooms offer a cutting-edge solution by providing robust security mechanisms that protect file-sharing.
What is a virtual data room? What makes this platform an essential tool for businesses across industries? What is the future of data rooms for file sharing? Read on to reveal the data room potential for your business!
A virtual data room, also known as a due diligence virtual data room, is a securely protected platform for storing and sharing confidential documents during business transactions. Typically, the solution is used in due diligence, mergers and acquisitions, initial public offerings, litigation, and fundraising. In addition to secure storage and file-sharing, the platform provides easy access to information, intuitive data and user management tools, and collaboration features.
Before we move on to our findings about the future of an online data room, let’s first explore its secure file-sharing capabilities.
- Dynamic watermarks. These signs represent semi-transparent text overlaid on a document for an extra layer of security. So, whenever a user accesses, prints, or downloads a document, their name, IP address, and access date appear on this file.
- Granular access permissions. A VDR admin can set detailed access policies for each folder and file. The number of permission levels may vary depending on the provider. For example, leading vendors such as idealsvdr offer 8 permissions levels: View, Fence View, Download PDF, Download Encrypted PDF, Download Original, Print, and Upload.
- Fence view. This function provides a restricted viewing mode protecting data from prying eyes. Thus, a user can only see the central part of the file while the rest of the content is a barred screen.
- Data redaction. You can hide confidential information by removing or blacking it directly inside your data room, be it a single word, line, paragraph, or image. This way, all redacted documents you share keep intellectual property and other sensitive data safe. Many providers offer AI-powered redaction, eliminating the need for manual data black-out.
- Remote shred. Unlike traditional data-sharing solutions, virtual data rooms allow you to restrict access to your documents even after a recipient downloads them. It’s possible since protected documents have 256-bit AES encryption and can only be accessed by those with current permissions.
Other data room features for secure data sharing include secure printing, screen capture prevention, secure spreadsheet viewer, IP address and time restrictions, and detailed reporting of all user activities. Hence, we recommend you consider all these features when making a virtual data room comparison to choose the best fit.
Due to unparalleled file-sharing protection, the demand for data rooms has skyrocketed across industries and continues to climb. And now, we will demonstrate some statistical data that proves this!
We used a Straits Research study covering the forecast period from 2023 to 2031 to analyze the data room’s future. And here’s our brief overview!
- North America dominates the global virtual data room market, with the U.S. being the biggest market shareholder. The VDR market in North America is estimated to grow at a CAGR of 10.6% over the forecast period.
- The European virtual data room market is expected to grow at a CAGR of 13.8% over the forecast period. Cloud technology, government regulations, and increasing demand for secure transactions drive growth. Other contributing factors are the shift toward cloud deployments and automation platform adoption.
- The Asia-Pacific data room market is projected to grow at a CAGR of 15.1% by 2028, driven by the increasing need for secure and transparent data-sharing options.
- The LAMEA region has a low level of data room software adoption. However, moderate growth is expected due to increased awareness of digitalization and technology. In addition, large companies investing in untapped regions will need secure solutions for data storage and sharing during business transactions.
Based on application, the M&A data room market is segmented into mergers and acquisitions, due diligence, audit preparation, fundraising, board and investor communications, intellectual property management, initial public offering, and others.
Yet, mergers and acquisitions represent some of the most significant events in the corporate world. In these transactions, companies must exchange sensitive information safely while ensuring that due diligence procedures are carried out. Data rooms are essential in this process since they provide robust security mechanisms. Consequently, businesses rely heavily on the software to transfer and manage sensitive documents securely.
The appetite for M&A deals is now higher despite economic and political instability. The latest EY Outlook Pulse CEO Survey reveals that 98% of CEOs intend to pursue a strategic transaction within the next 12 months, indicating a significant increase from 89% in January last year. With businesses’ increasing dependence on data rooms, it’s clear that the demand for this solution will continue to grow.
Based on industries, the data room market is segmented into BFSI (banking, financial services and insurance), e-commerce, retail, energy, IT, healthcare, construction, real estate, and others.
BFSI dominates and is projected to grow at a CAGR of 11.2% by 2031. Organizations in this industry employ data rooms to protect privacy and minimize the risk of cyber attacks. Also, the growing use of the platform in the banking sector helps business leaders speed up deals and daily workflows and reduce costs associated with maintaining physical data rooms.
Looking at regional, application, and industry analysis, we can safely suggest that more organizations worldwide will adopt virtual data rooms.
However, to protect your data with a VDR, you should choose a provider responsibly. In particular, check whether the solution you are considering includes the features we’ve listed above, compare virtual data room pricing, study user reviews, and start sharing data safely!