Virtual data rooms are offered in different types, each suited to the specific needs of a business. Virtual data rooms are often utilized for M&A due-diligence, but can also be types of data rooms used for legal projects, fundraising and other high-risk business processes that require secure, confidential document management.

The most effective VDR platforms are designed to offer a flexible and scalable framework for managing sensitive data. They typically have a central dashboard with a folder system similar to the physical file system. This makes it easier for stakeholders and other parties to categorize documents. This is important, especially when multiple users are logging into the dataroom simultaneously. Advanced search functionality is vital, allowing users to quickly locate the documents they require without having to search through a myriad of documents.

A well-designed virtual data room should also include collaboration tools to facilitate sharing and comments. This lets users give feedback on any document, and to share their thoughts with other parties directly. The negotiation process will continue to progress. In addition, a majority of platforms offer annotation tools that allow participants to write notes on the documents they are looking at -However, the other party won't be able to see the notes.

Red data rooms are used for processes that require a higher level of confidentiality, while green data rooms offer the perfect balance of security and openness. The former is typically used for M&A due-diligence, whereas the latter is more popular in legal services, healthcare and real estate industries.