A data room is an online secure platform for sharing and storing confidential information with authorized users. They can be both virtual and physical and are used to ensure due diligence in a transaction.

Data rooms are typically used in M&A transactions, where both parties have access to a digital repository containing sensitive information they cannot divulge. Numerous businesses of all sizes and kinds rely on data rooms for secure collaboration and file sharing, especially small and start-ups who might not have the resources or time to invest in an office setup.

When choosing a provider of a data room, choose one that provides a complete collection of information about user activity. This includes who has accessed what documents and if they’ve printed or downloaded them. This is vital to ensure that confidential information isn’t slipped into in the wrong hands, which could be a major issue for businesses considering selling or fundraising.

Look into a dataroom that has an integrated Question and Answer (Q&A), which can assist in keeping due diligence discussions on track and reduce the risk that sensitive data is shared outside of the dataroom. Also, it’s important to choose a data room solution that offers plenty of storage space for documents and files you expect to upload. In addition, there are simple task management tools that allow you to assign reading or document upload tasks to your advisers and team members.