Virtual data rooms are secure storage facilities that permit users to view confidential documents in a safe setting during due diligence or other business transactions. It offers a high degree of security that standard file-sharing platforms do not have, such as the ability to grant user permissions in granular ways, encryption at rest and while in transit with two factor authentication, content watermarking and audit trails that display logins as well as downloads, uploads and logins. These features limit the threat of theft of intellectual property and unauthorised access to confidential corporate and financial information that could jeopardize transactions or result in lawsuits.

A virtual data room is most frequently used to share IP visit this page documents with external parties, like potential buyers and licensing partners, during M&A due-diligence. Virtual data rooms can also be useful for sharing large files or documents with internal teams and stakeholders. They also facilitate collaboration with auditors, outside counsels or consultants.

A virtual data room could help streamline the due diligence process for external participants in restructuring or bankruptcy. These types of transactions typically require reviews of a company’s financial performance and debt, as well as accounting reports such as cash flow statements capital expenditure budgets, legal contracts and liens, as well as customer credit reports. To protect the integrity of transactions and prevent unauthorized access, a secure data room is essential.