Virtual data rooms are secure storage facilities that allow users to access confidential documents in a controlled environment during due diligence or other business transactions. It has a top-quality set of security protocols that aren’t available on general file-sharing platforms. These include granular access rights for users, encryption in transit and in rest and at rest, two-factor authentication, watermarking content and audit trails that record logins, downloads, and uploads. These features lower the threat of intellectual theft and unauthorised access to sensitive financial or corporate data, which could compromise agreements and result in lawsuits.
A virtual data room is most frequently used to share IP documents with external parties, like potential buyers and licensing partners during M&A due-diligence. The ability to scale virtual data rooms also allows them to share large or confidential documents with internal teams and the stakeholders. They also facilitate collaboration with outside counsels, auditors, or consultants.
A virtual data room can be used to simplify the due diligence process for other participants in bankruptcy or restructuring. These types of transactions typically require reviews of a company’s previous financial performance dataroomanalytics.net/running-a-successful-startup-crowdfunding-campaign-a-guide and debt, accounting reports as well as cash flow statements capital budgets for expenditure, legal contracts and liens and customer credit reports. To ensure the integrity of transactions and prevent unauthorized access to the data, a secure data room is required.