A data room service provides an encrypted, virtual environment for sharing information during due diligence, M&A, financing, bankruptcy, and other business processes and transactions. In these instances, the data shared could be sensitive or secretive. It is therefore important to secure this data. Using a data room to share files will save time, money and effort over email or physical documents. However, choosing the most effective data room service requires some work upfront to find out which features are most suitable for your particular situation and needs.
There are many companies that offer data room services each with a different set of features. Some focus on security, others on the user experience and communications, and others provide the combination of both. A few popular options include Firmex, VDRSimple, iDeals, Intralinks, and Merrill Datasite.
Most data rooms have granular access permissions that protect confidentiality and ensure users only access relevant content. Some data rooms also provide multiple factors of authentication, such as time and IP restriction on access and limitations to prevent unauthorized downloading or usage. Some offer internal team messaging that reduces the necessity for external tools to communicate such as email and can help to cut down on redundant communications.
Certain providers offer additional services to accelerate due diligence, like scanning and transcription of documents. These are typically added cost, but they could be worth it for smaller companies or complex transactions.