A data room, also known as virtual data room (VDR), is a secure place for sharing confidential information. Data rooms are the modern equivalent to physical rooms where documents were hardcopies kept to be reviewed during negotiations to purchase or sell. They are typically utilized to aid in legal and economic due diligence.
They are utilized by companies of all sizes, and are particularly useful for SMEs with team members scattered across the world. In the past, larger businesses might have chosen to use more expensive in-house solutions, but as VDRs continue to improve and become more accessible, they are increasingly being adopted by SMEs too.
The use of a data room
A data room is useful at any point in the business lifecycle, although it is typically used during M&A activities or other processes that require confidentiality. Venture capital firms, for example, will often want to review contracts and other documentation before closing an investment. This can be done in a virtual data room with access granted to 11dataroom com attorneys and other parties.
A preparation dataroom can also assist an organization prepare for due diligence by uploading documents early and making it accessible before third parties are invited to join. Certain data rooms are equipped with tools for redaction that allow you to quickly and easily eliminate sensitive information prior to sharing documents. This reduces the risk of making an embarrassing mistake which could jeopardize any deal.