Data rooms are primarily used to store information, track and share crucial documents in the business. They are commonly used during M&A transactions or fundraising, as well as other due diligence processes. Contrary to email and free file sharing services they are protected by using password protection such as two-factor authentication and watermarks, and other privacy features. The ability to control and restrict access to sensitive information is especially useful for companies working with confidential information, such as biotechnology or medical devices.
A data room can be accessed by authorized users from any place with an internet connection, which includes mobile phones and tablets. Users can browse the documents, print them out and download them in the data room. They can save the documents to be reviewed later. Users can also request help, receive notifications and be informed when a document is uploaded or if there’s new comments added to an existing document. The data room can be searched, making it easy to find information, even if effective management through real-time data analytics the data is scattered or not organized.
To maximize the value of your data room, you should create an organized structure for your folders that reflects your business or the transaction in which you’re involved. Make sure you clearly label the folders and documents and group them in a similar way to make it easy for potential buyers to grasp the whole picture. Consider implementing an audit log that records who has downloaded and viewed each document. This feature is important for demonstrating compliance to regulatory requirements or protecting intellectual property.