Data rooms are a common feature in M&A as well as other business activities like capital-raising rounds or an initial public offering (IPO). They are highly effective document sharing tools that facilitate secure and efficient data exchanges between different parties. They are more user-friendly than cloud storage apps or other file sharing tools, and have superior security features as well as privacy and collaboration.
In addition to standard industry-leading encryption Data room providers also offer a comprehensive logging and reporting feature that ensures that all actions on the platform are recorded. This includes access times, who has viewed which documents and how many times they were looked at. This data is also backed up in various locations and is available for retrieval after the deletion of files. Other important security features of virtual data rooms are dynamic watermarks on printed and downloaded files, permissions based on role, two-way syncing, automatic indexing, timeouts during inactivity and virus scanning.
A data room can be enriched by features that facilitate efficient collaboration. These include a rationally organized folder structure, search capabilities, different languages, and comments section where users can ask questions of other members. This facilitates effective communication and speeds up the process of decision-making. Additionally, data rooms allow for granular user restrictions/permissions and allow for the monitoring of all login activity by checking IP, device and location to prevent unauthorized data access. Additionally, they are the ideal tool for protecting intellectual property, as they help complimentary top digital storage options prevent the disclosure of sensitive information throughout the transaction process through features such as watermarking, download restrictions and screen-scraping prevention.