A data room, also known as a virtual dataroom (VDR) is a secure storage space for sharing confidential information. The modern equivalent to a physical room where hard copies of documents could be kept for a review during sales or buying negotiations Data rooms are usually utilized to aid in legal and financial due diligence.

Businesses of all sizes use VDRs, but SMEs with team members spread across the globe find them especially useful. In the past, larger companies might have chosen to use costly in-house solutions. However as VDRs improve and become more accessible, SMEs are also adopting them.

When to use a data space

A data room can be useful at any stage of the business lifecycle, although it is usually used during M&A processes or other sensitive processes that require confidentiality. Venture capital firms, for instance typically need to review contracts and other documents prior to closing an investment. This can be done in a data room that is virtual, with access granted to attorneys and other stakeholders.

A preparation dataroom can also help an organisation prepare for a due-diligence process by uploading documents early and making it available prior to when third-parties are invited in. Some data rooms have tools for redaction which can be used to quickly and easily remove sensitive information before sharing documents. This reduces the risk read post 11dataroom.com of making a costly error which could affect any deal.