The primary reason to use a data room is to save, share and track critical business documents. They are typically used in M&A transactions and fundraising, along with other due diligence processes. Unlike email or free file sharing services they can be secured with password protection such as two-factor authentication and watermarks, and other security features. The ability to monitor and restrict access to sensitive information is useful for businesses dealing with confidential information, such as medical devices or biotechnology products.
A data room can be accessed by authorized users from any place with an internet connection, which includes tablets and mobile phones. Users can view, download and print documents within the data room, or save documents for later review. They can also ask questions and receive alerts when a new document is uploaded or there are new comments on existing documents. Additionally, the data room is searchable, which makes it easy to find the data you require, even when it’s been stored in multiple places or is not properly organized.
To maximize the value of your data room, design an organized folder structure that reflects your business or the transaction you’re involved. Label the folders clearly, and group documents together to make it easy for buyers to see the whole picture. Consider implementing an auditing log that records who has downloaded and viewed each document. This feature is important in proving compliance with regulations or for protecting intellectual property.