A secure data room is a solution in the cloud specifically designed for the purpose of storing and sharing confidential business information with restricted access. The modern version of a physical room where hard copies would be reviewed during negotiations for buying or selling, today’s virtual data rooms provide encryption technology and advanced security features as well.
Secure virtual datarooms operate on the same principles as personal storage and sharing services like Dropbox or Google Drive but with a significantly higher level of security protection. Data and documents are protected while they are being moved to the cloud, shared in a virtual space and stored on the server. This makes them much more secure than the basic file sharing and storage tools that depend on passwords or plug-ins to lock use to specific devices and locations.
A data room typically includes collaboration tools in addition to access basics (on any device, no matter where you are). chat and group messaging, to increase the efficiency of due diligence processes. They also have a complete audit trail that shows every user’s activity, to ensure that any breaches can be tracked and traced back to their source.
The majority of data rooms are built to facilitate the due diligence process of a merger or acquisition deal, with both sides able to access the information and conduct a thorough review. They are also becoming more popular for other M&A tasks like fundraising, restructuring, and divestitures. They can also be used as a way to share and review documents within teams, with an added benefit of more robust encryption security protection compared to traditional email.