Virtual Data Room for Investment Banking

When a company is thinking about raising capital, going public, or being acquired, involving investor bankers is virtually inevitable.

Investment banking experts facilitate financial transactions and assist businesses in such processes as mergers and acquisitions, initial public offering (IPO), and due diligence

Having a dedicated virtual data room for banking (VDR) significantly boosts the deal. 

How exactly? What’s a virtual data room for investment banking, and how is it used? How to choose one, and what features are desirable?

Explore everything about virtual data room banking below.

What is an investment banking data room?

A virtual data room for investment banking is basically a cloud-based repository where all the sensitive documents and confidential information required for the mergers and acquisitions transactions are stored. 

This documentation is involved in the due diligence process and can be accessed by the sell-side, potential buyers, investment bankers, and other interested parties. 

An investment banking data room ensures high-end security and facilitates complex deals with the help of various data and project management features.

Why are virtual data rooms important for investment banks?

Below are the main reasons to implement a virtual data room investment banking solution:

  • Security. The key requirement to the finance data room is the high level of protection the VDR software provides. A virtual data room offers a secure location where users can store privileged data, share confidential documents, and interact with the parties involved with no risk to the business. This way, the sell-side and potential investors can rest assured that all the data is safe and proceed with conducting financial transactions.
  • Ease of use. Dealing with large volumes of information is time-consuming, especially when you’re dealing with physical documents. The main advantage of VDR providers over physical data rooms is that it’s easy to use and navigate, no matter the technical background. The majority of modern data rooms have a clear structure and offer training and guidelines for all new users.
  • Accessibility. Often, potential buyers, the sell-side, and investment bankers have different time zones. This might significantly influence the deal flow and prolong the transaction time when using traditional data rooms. Opting for virtual data room finance services, you save time greatly as all the users can access documents anywhere and anytime via one secure link.
  • Enhanced collaboration. A virtual deal room not only provides safe file sharing and possibilities of storing documents but also assists you in improving collaboration between all the parties involved. Data room providers usually offer dedicated Q&A sections or in-built chat services where stakeholders can leave the question and get prompt answers. This also speeds up the investing deal.
  • Cost-efficiency. Using traditional data rooms for securing sensitive documents is quite costly since you pay for the rent, employees, and everything related. With a virtual data room for investment banking, you only pay for cloud-based storage based on your business needs. VDR providers usually offer several subscription plans depending on the company’s size and required features. What’s more, you can always start with a free demo to test the services before making a purchase.

How do banks use secure VDRs?

To proceed with the operations, investment banks need a suitable virtual data room. What for exactly?
Below are the common use cases of virtual data rooms for investment banking:

  • To implement an agile approach
  • To organize and structure all the company’s documentation and make it attractive for potential investors
  • To maintain an effective collaboration between buyers and sellers
  • To manage the due diligence process 
  • To track the documents’ performance and react proactively to close faster the deal

How does using VDR improve the investment banking process?

In a few words, a virtual data room for investment banking greatly boosts the whole deal process. But how exactly do you and your company profit from it? 

These are the main benefits:

  • Reduced cost. Opting for one VDR software instead of several physical data rooms, you save your time and money. What’s more, the high level of protection a virtual data room provides reduces the risk of possible costly legal proceedings and contact with attorneys in case of any data leak.
  • Detailed analytics and prompt reporting. A virtual data room allows you to fully control the deal, thanks to the various project management features. You can easily assign tasks and monitor the process of their completion, get reports about all the actions performed in the data room, and receive notifications when vital documents are viewed or downloaded.
  • Effective collaboration. Admins in virtual data rooms are in charge of interaction between all the parties involved. Potential buyers can easily reach the sell-side or investment bankers and get prompt answers when any questions arise.
  • Accelerated transaction processing. Being able to review all the required documents in one place, prospect buyers can decide on the deal much faster.

Important data room features for the banking sector

Every VDR software comes with a particular set of features that ensure the security of financial documents and successful collaboration between parties involved. 

You’ll need a virtual banking data room for many tasks during the investment banking process. Some of the most common use cases include:

To successfully plan those processes, you should expect certain features from a reliable virtual data room for investment banking. Let’s review the most universal of them.

Data security

Virtual data rooms always provide document security measures aimed to keep your essential documents protected. Some of the most popular and important tools are:

  • Dynamic watermarking. You can add custom watermarks that will appear on top of every document you upload to the VDR when it’s viewed, downloaded, or printed. What’s more, you’ll get all the information about who, when, and where downloaded your file.
  • Access restrictions. You take full control of who can view, download, or print your documents. Enable certain permissions to each file so that only the parties involved can access it.
  • Redaction. This feature enables you to redact the text, image, or area of the file inside your storage. This way, your confidential information stays private and protected from unauthorized views.
  • Electronic leash. This feature allows you to pull a certain document back when someone’s access rights expire or revoke. In other words, you ensure confidential files are protected during the deal.

Data management

It has to be easy to upload, manage, and exchange documents needed for the investment banking deals inside the virtual data room. That’s why modern vendors offer various data management features that help you to spend less time on file sharing. Some of the most common are:

  • Drag and drop upload. Big corporations have lots of documentation to share when preparing for the investment banking round. The drag and drop upload feature significantly saves time and allows for quick uploading in just a few clicks.
  • Bulk upload. With this feature, you can also upload large amounts of files of many formats in seconds.
  • Non-duplication feature. This tool allows you to ban the possibility of downloading the same files multiple times. This way, you control the security of your confidential files.
  • Integrations. Most virtual data room vendors offer certain integrations that allow you to synchronize your data room with the apps you’re used to. Some of the most popular integrations are Windows Explorer, Slack, Dropbox, and Gmail.
  • Automatic index numbering. With this feature, you can skip the stage of manually creating hundreds of folders. All your uploaded data will be organized automatically.
  • Full-text search. In case you need to find something particular inside your VDR, you only need to enter the keywords or apply multiple search filters. It won’t take more than a few seconds to reach the document you’re looking for.


Investment bankers are mediators between the sell-side businesses and potential buyers. And their work is much more simplified with the in-built collaboration tools virtual data rooms provide. 

This allows all the parties to interact inside the VDR and significantly speeds up the process.
The most common collaboration features are:

  • Q&A section. In case any questions arise while reviewing the documentation, prospect investors can leave the question in the dedicated section, and admins will be promptly notified about that. This way, the answer is delivered in a timely manner.
  • In-built chatting. It allows the parties involved to discuss all the issues in real-time without leaving the virtual data room.
  • Remote access and control. Provided all the participants of investment banking deals might be in different time zones, every team member should be able to access the virtual data room and needed documents anywhere and anytime. Remote access and control enable that.

Customer support

All the users of the VDR should have an opportunity to reach support in several ways and always get quality assistance.

What should you expect from the customer support of a reliable banking data room?

  • Different ways of contact. The bare minimum is a phone, email, and live chat. Most vendors also provide training and guidelines for every user.
  • Quick response and round-the-clock availability. Provided that the parties involved in the investment banking process might be in different time zones, it’s important they all get help at any time of the day.
  • Knowledgeable assistants. The quality of support also matters. The support team should understand your pains, speak your language, and react accordingly.

Security compliance

To ensure all the confidential information you share inside the virtual data room is safe and protected, vendors should provide certain security certifications and compliance. The most common are:

  • SOC 1/SOC 2 certifications. These certifications ensure that all the personal and sensitive information you share inside the virtual data room stays safe and protected.
  • FISMA. If a particular vendor is FISMA compliant, it means the company provides certain security measures aiming to protect government information, operations, and assets against threats. It’s especially important if your company comes from the government sector.
  • DIACAP. It ensures security when communicating and interacting over the Global Information Grid. 
  • FedRAMP. This certification is crucial for all federal organizations. It ensures consistency in the security of the government’s cloud services.
  • Multiple data centers. Owning multiple data centers, a virtual data room company ensures your data’s physical security and multiple layers of surveillance.
  • ISO 9001/ ISO 27001 certification. These certifications mean that the virtual data room invests in the people, technology, and assets to protect your sensitive data. It also provides an expert and independent assessment of whether your data is properly secured. 
  • SSAE 16 certification. It means that the vendor has gone through an audit which ensures that all the descriptions of security measures the company states are fairly presented.

Tips on choosing the best data room for investment banking

Make sure a vendor meets these criteria when looking for a reliable virtual data room for investment banking:

  • Variety of data security features. Security is the top priority for investment banks when it comes to virtual data rooms. Since the deal requires sharing lots of confidential documentation with third parties, the data should be securely protected. Look for such features as dynamic watermarks, electronic leash, redaction, fence view, secure spreadsheet viewer, and more. 
  • Safety certificates and compliance. The particular provider can guarantee security of your private data when it has such certifications as ISO 9001/ISO 27001, SSAE 16, SOC 1/SOC 2, FedRAMP, DIACAP, FISMA.
  • Ability to manage users’ access. Investment banking is always about high stakes. That’s why being able to control who can access what is important. Reliable virtual data rooms offer such access security features as two-factor authentication, granular user permissions, time and IP restrictions, mobile device management, and more.
  • Variety of data management options. Investment banking deals usually involve large volumes of data. The easier it is to manage and structure all those files, the faster you can close the deal. Look for such features as bulk or drag-n-drop upload, automatic index numbering, optical character recognition (OCR), integrations with different apps, and more.