What is a Data Room?
No one in business would make a major decision without all the facts.
But for significant material events like mergers and acquisitions, tenders, and capital raising, getting all the information can mean combing through tens of thousands of highly confidential documents.
This poses a major security risk to the business. How can the right people review the necessary information, while ensuring it doesn’t get into the hands of the wrong people? By using a data room.
A data room is a secure space where confidential documents can be kept and only read by people authorized to access them. When businesses need a secure location to share confidential documents with selected third parties, they use a data room to control who gets to see what. This minimizes risk that their confidential business information will be exposed to unauthorized parties.
Traditionally, data room due diligence was conducted in a physical room. Today, it happens online in what are called virtual data rooms.
A traditional data room is literally an actual room full of documents. Businesses would use a room at their own headquarters, their lawyer’s offices, or a secure location like a bank where they could house documents and control access to them.
Access to traditional data rooms is tightly controlled. They’re usually physically secured, guarded, and closely monitored.
Now, virtual data rooms are used by companies, advisors, legal teams, investors and auditors instead of traditional data rooms. An essential part of due diligence for material events like tenders, legal transactions, fundraising, and audits, a virtual data room is a secure online place to safely review confidential information.
Learn more: How Secure is a Virtual Data Room?
Physical data rooms have major limitations:
Virtual data rooms on the other hand:
To execute more secure deals, much faster - and with better control over multiple bidders - a virtual data room is the solution.
An investor data room is a secure space for the sharing of sensitive information relating to the company in which the investor is considering investing. Data rooms for investors used to be physical rooms, however today they are almost always virtual.