A data room is an electronic vault to store sensitive information. Data rooms are used for various transactions, including mergers and purchases, fundraising, the first publicly traded offerings (IPOs) and legal proceedings. In the past, companies were able to share documents via spreadsheets or email. This was unefficient and can be dangerous for sensitive information since it’s easy to forget the versions of documents being sent and who has access. Data rooms can solve these issues by allowing a central location to share documents with multiple parties at the same time and also provide advanced security features, such as redaction, fence view, and activity monitoring.

The majority of the time, data rooms are utilized in purchase and merger transactions. In due diligence, buyers require access to large quantities of confidential documentation. A virtual data room allows these buyers to review the documents without having to go to the office of the seller and saves the company money on overhead costs.

There are numerous virtual data rooms that offer various capacities, prices and features. Choose a service that is compatible with your needs in terms security and storage capacity.

Once you’ve setup your dataroom, you will need to upload the data and then organize it into folders that reflect the transaction. Make sure to clearly label the folders and documents so that all parties can easily locate what they need. Consider adding metadata to your documents to ensure that they can be searched and categorized. This can help reduce the time required to review documents, and increase transparency and accountability in the event that there are issues in the content of the document.