A data room is an electronic vault that stores confidential documents. The most commonly used use of a data room is during due diligence on an M&A deal, when both parties need to review business-critical documents and contracts. However, it’s also used to share information with investors for financing or restructuring projects or with third-party companies for e-discovery or bankruptcy cases.
The best data rooms are designed with due diligence in mind. They offer features such as granular access rights and user activity reports. These will allow the administrator of the data room to view the users who have visited and downloaded specific documents. They will then be able to ensure that only those who have been authorized have access to confidential documents.
There are a variety of file sharing tools that are free and easy to use, but they may not have the security or functions of the virtual data room. These tools may not offer the folder structure or search capabilities that are required to support an effective due diligence process.
It is essential that a data storage facility has a range of different storage capacities based on the volume of documents that will be uploaded and stored. It’s crucial to be able to choose the flexibility and security of being able to upgrade or downgrade subscriptions without difficulty. It’s also important that the data room allows for team collaboration with features like secure chat video conference calls, secure chat and an extensive Q&A tool that can aid in the due diligence process.