A data room, also known as a virtual data room (VDR) is a secure place for sharing sensitive information. It is the modern version of a physical room where hard copies of documents could be kept for review during buying or selling negotiations and are commonly utilized to aid in financial and legal due diligence.
They are utilized by companies of all sizes, and are especially beneficial for SMEs who may have team members spread across the globe. In the past, large companies might have relied on costly in-house solutions. However as VDRs improve and become more accessible, SMEs are also adopting them.
Use of a data space
A data data room definition room can be useful at any point in the life cycle of a business, but it is usually used during M&A processes or other sensitive processes that require confidentiality. Venture capital firms, for example typically need to examine contracts and other documents prior to closing an investment. This can be accomplished through a virtual dataroom, which has access granted to attorneys and other parties.
A data room used for preparation can also help an organisation get ready for due diligence by having documents uploaded early and having it accessible before third parties are invited into. Some data rooms offer redaction tools which can be used to effectively and quickly remove sensitive information from documents before sharing them – this reduces the chance of making an embarrassing error that could threaten the deal.