A data room is an online platform that allows users to share and securely store confidential information. They are either physical or virtual and are usually employed to complete financial or legal due diligence when a transaction is made however, they can also be useful in business planning, fundraising or even meeting regulatory compliance.
Data rooms are typically employed in M&A transactions in which both parties have access to a virtual repository that contains important information they cannot reveal. Many businesses of all sizes and types rely on data rooms for secure collaboration and sharing of files – especially start ups and SMEs that may not have the budget or time to invest in a office setup.
When choosing a provider of a data space, choose one that comes with a full range of reports on user activities. This includes who has accessed what documents and whether they’ve printed or downloaded them. This is crucial to ensure that private information doesn’t get into in the wrong hands, which could be a major issue when companies are contemplating selling or fundraising.
Consider a dataroom with an integrated Question and Answer (Q&A) which can aid in keeping due diligence discussions on track and minimize the risk that sensitive information is shared outside of the dataroom. Additionally, it’s a good idea to choose a data room solution that has ample storage capacity for the documents and files that you intend to upload – plus, user-friendly task management tools that will help you assign reading or document upload tasks to your team members and advisers.