Virtual data rooms are secure storage facilities that permit users to view confidential documents in a controlled setting during due diligence or other business transactions. It provides a high level of security protocols that other file sharing platforms lack, such as granular user permissions as well as encryption in transit and during transit with two factor authentication including content watermarking, and audit trails that show logins uploads, downloads and logins. These features limit the risk of theft of intellectual property and unauthorized access to sensitive corporate and financial information that could compromise transactions or result in lawsuits.

A virtual data room is most often used to share IP documents with other parties, such as potential buyers and licensing partners during M&A due-diligence. Virtual data rooms can also be helpful to share large files or documents with internal teams and other stakeholders. They also allow collaboration with auditors, outside counsels or consultants.

A virtual data room could help streamline the due diligence process for external participants in restructuring or bankruptcy. These types of transactions typically require a review of a company’s prior financial performance and debt, accounting reports, cash flow statements, capital budgets for expenditures, legal contracts and liens, and credit reports. A secure data room system is necessary to prevent unauthorized access to these vital documents and ensure the integrity of the transaction.

dataroomanalytics.net/running-a-successful-startup-crowdfunding-campaign-a-guide/