The Difference Between Physical and Virtual Data Rooms in M&A Deals

Sunday, 6 February 2022

The Difference Between Physical and Virtual Data Rooms in M&A Deals

Posted by Madhu Gupta
During mergers and Acquisition deals, the company selling its assets may need to share sensitive data and information about the company. However, sharing via email can pose huge security threats and lead to leakages or a security breach.

For this reason, companies need to have a Data Room, which ensures safe document sharing and access to authorized people only. When you are setting up a data center, you may have to choose between a physical and a virtual one. Which of the two should you choose?

Here are the main differences between the two.

How These Two Types Of Data Centres Operate

Conventionally, companies would create a data room on their premises. They would then have to hire a security company to offer 24-hour surveillance. The company's top officials would then provide a physical list of people allowed to get into the room and the amount of access they would get when getting into the room.

The other option was for the company to rent storage space in separate premises, where the buyers or bidders can go when they need to carry out their due diligence.

On the other hand, virtual data centres are a cloud solution for companies. They allow easy sharing and security for confidential documents and information through a secure internet connection.

The Costs Of Setting Up Both Options

One of the reasons why people are moving from physical data centres to virtual ones is because of costs. Generally, physical centres can be expensive to set up, especially when you think about the amount of money you will require to build a secure space, hire a security company, or even pay for storage in a company that offers such services.


Additionally, during mergers and acquisitions, the costs will increase. The company will have to fly the buyers or bidders to pay for their meals and hotel rooms. And remember, some of these people are high profile people; therefore, they won’t go into any hotel.

Virtual data centres eliminate these extra costs since people can access the documents even without being physically present. They can s
hare, print, and even read if they have permission to do so.

Security Of Virtual And Physical Data Centres

Normally, both options are very secure. Physical data centres have heavy security around them. However, there’s one problem. Companies risk losing sensitive data they require during an M&A deal if a natural catastrophe, such as a fire, occurs. Additionally, papers will wear and tear with time, which is another limitation.


With virtual data centres, this is not a problem at all. If you get your services from a reliable provider, they will provide multi-factor authentication and 24/7 third-party monitoring. Besides this, documents can stay on the server for as long as you want. You don’t worry about losing the documents or important data.

Final Thoughts

As you can see, virtual data centres carry more benefits than traditional physical data centres. During the merger and Acquisition deal, you will reduce operational costs and increase the security of your most sensitive data.

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