A data room is an electronic vault to store sensitive information. Data rooms are used for various transactions, including mergers and acquisitions, fundraising, initial publicly traded offerings (IPOs), and legal procedures. Traditionally, companies would share files via email and spreadsheets which is not efficient and can be risky for sensitive information since it is easy to lose track of different versions of documents and who has access to what information. Data rooms provide a central location for sharing documents with multiple parties simultaneously and offer advanced security options such as redaction, fence-views and activity monitoring.
The most common use for data rooms is in mergers and acquisition deals. During due diligence, buyers require access to large quantities of confidential documentation. A virtual dataroom permits buyers to examine documents without having to visit the offices of the seller, thereby saving the company money on cost of overhead.
There are numerous virtual data room companies with various capacities, prices and features. Select a provider that meets your requirements in terms of security and storage capacity.
Once you’ve setup your dataroom, you will need to upload the information and organize it into folders that reflect the transaction. Label documents and folders in a clear way to make sure that the stakeholders know what they’re seeking. Also, consider adding metadata to documents so that they can be searched and classified. This will decrease the time spent reviewing documents and increase transparency and accountability in the event that there are any problems with the content.