29th Aug 2025: Mergers and acquisitions become important in fast-growing economies like India, as businesses look to expand, consolidate, or attract global investors. With deals worth nearly $85 billion recorded in 2023, India’s M&A market is evolving rapidly. But alongside growth comes the challenge of managing sensitive data, regulatory compliance, and time-consuming due diligence. Virtual data rooms (VDRs) are emerging as a solution, streamlining the process for companies of all sizes.
Compliance becomes a deal enabler
India’s startup ecosystem has reshaped the M&A landscape. With over 1.59 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), acquisitions are no longer limited to mature companies—early-stage and strategic deals are also becoming common. “Compliance is no longer just a legal requirement, it is a strategic edge,” said Harvinder Singh, Founder and CEO of Confiex Data Room. “Investors want transparency on intellectual property, confidentiality, and filings before they commit.” Regulatory reforms under the Companies Act, effective 2025, have further raised the bar, with faster disclosure deadlines and stricter penalties. Using VDRs to digitise compliance records gives startups a way to stay deal-ready and build confidence with buyers.
Protecting sensitive data
Data breaches can derail M&A deals, damaging valuations and triggering legal disputes. “In 2023, the average cost of a data breach in India stood at Rs 179 million. Ystill rely on email, messaging apps, or shared drives to exchange documents. Traditional channels are risky. Virtual data rooms use encryption, dynamic watermarking, and audit trails to ensure data stays secure,” Singh explained. VDRs also meet requirements under the new DPDP Act and the Indian Evidence Act, giving companies legal protection alongside technical safeguards.
Faster due diligence
Due diligence is one of the slowest stages of an M&A transaction, often lasting weeks or months. Virtual data rooms reduce delays by creating a single secure repository where documents can be reviewed in real time. Features like bulk uploads, indexing, search, and Q&A modules allow parallel reviews instead of step-by-step checks. Industry estimates suggest VDRs can shorten due diligence timelines by 20–40%. Singh said, “The ability to close faster not only reduces costs but also helps companies lock in better valuations before market conditions change.”
Adoption spreads across sectors
Once seen as tools for large corporates, VDRs are now being used by startups, medium-sized businesses, and government agencies. The pandemic accelerated this adoption, making secure digital platforms essential for remote collaboration. “Earlier, companies asked why they needed a data room. Today, they ask which one provides the strongest compliance and trust,” Singh observed.
India’s VDR market, valued at $101.5 million in 2024, is expected to reach nearly $421.5 million by 2030, growing at a CAGR of 27.8%, well ahead of global averages. As India’s economy integrates more closely with global capital, the importance of secure digital platforms will only grow. Virtual data rooms are helping companies reduce risks, accelerate timelines, and strengthen compliance, making them an integral part of India’s M&A ecosystem.