What is a Secure Data Room?

A secure data room is an online collaboration platform that simplifies due diligence, cutting down on timeframes in M&A and other deal making while also providing a solid security. It allows sell-side and buy-side teams to handle the full lifecycle of a transaction from beginning to end with confidence.

What distinguishes a secure dataroom from file-sharing sites such as Dropbox is the fact that it’s more designed for the business with the capability for users to be divided into groups and permissions to be granted at granular levels. Analytics can also provide insight into usage (e.g. when, how and from where data is accessible. Some have more sophisticated features such as the ability to prevent downloading and copying (a huge no-no) or even the ability to display documents on screens that can’t be screenshotted. Many utilize industry-leading encryption to encrypt sensitive information and use multi-factor authentication to ensure that the person attempting to login is the one requesting access.

The most secure data rooms allow document download for offline viewing in PDF format. However, if you allow users print these files onto physical printers or save them to file drivers for different purposes they lose the protection which is applied to the original data in the virtual data room.

If you can download these files from a room or another system, and then view them without being connected to the Internet it defeats the purpose of using a data room to store sensitive documents for M&A due diligence, litigation, compliance and other documents that are sensitive. These documents need to be kept on devices, not transferred to servers. This is why we suggest using a DRM system that locks files to devices rather than to servers and makes it impossible to remove them from devices or share them.