It could be M&A or business audits, fundraising, legal cases or making preparations for an IPO A data room can be used as a secure channel to share confidential information with other parties. Data integrity is protected by the granular access rights that can be set based on roles, folder or document levels, and activities within the room. The best providers also offer an extensive list of security perks, such as encryption, watermarks and multi-layered server security.

The most popular use for the use of a data room is due diligence, in which two parties go through business-critical documents to determine potential risks or issues before concluding an agreement. A virtual data room is perfect for this purpose, since it allows both parties to upload and access documentation from a single location. A good data room will include a template structure that can be customized according to the specific requirements of a project or due diligence. It will also have an efficient task management tool with a clear record of all reading and uploading tasks and the individuals they’ve been assigned to.

As a result, it is much easier to follow-up on tasks and keep projects on track. A majority of data rooms include a Questions and Answers module that facilitates discussion between the parties and speeds up the negotiation process and removing the need to send emails back and back. Most top-rated solutions provide comprehensive reports that provide all the users’ activities. This includes which documents were viewed, when they were looked at, and by whom.