What Is a Secure Data Room?

A secure data room is a cloud-based solution specifically designed for the purpose of storing and sharing sensitive business information with controlled access. Virtual data rooms are the current equivalent to physical rooms where hard copies were scrutinized during sales and buying negotiations. They also provide advanced security features such as encryption technology, encryption and other advanced features.

Secure virtual datarooms are built on the same principles as personal file storage and sharing services like Dropbox or Google Drive but with a more secure level of protection. Documents and data are encrypted while they are being moved to the cloud and shared in a virtual room and stored on the server. They’re therefore safer than other file sharing and storage tools, which rely on plugins or passwords to restrict access to specific devices and locations.

In addition, to basic accessibility (on any device and no matter where you are) Data rooms typically includes collaboration tools, e.g. chat and team messaging, to enhance the efficiency of due diligence procedures. They also provide a full audit trail that tracks all the activity of all users to ensure that any breaches can be tracked and traced back to the source.

The majority of data rooms are created to support due diligence in an acquisition or merger. Both parties can access the information in order to conduct a thorough analysis. They are also becoming popular for other M&A activities like fundraising, restructuring, and divestitures. They can also be used to review and share documents within teams, with an benefit of having more robust encryption security when compared with traditional email.