Virtual data rooms are secure repository that permit users to view confidential documents in a safe setting during due diligence or other business transactions. It comes with a superior level of security protocols that common file sharing platforms lack, such as granular user permissions as well as encryption in transit and during transit with two factor authentication, content watermarking and audit trails that show logins as well as downloads, uploads and logins. These features lower the risk of intellectual property theft and unauthorized access to sensitive corporate and financial information that could compromise deals or lead to lawsuits.
A virtual data room is most commonly used to share IP documents with external parties, like potential purchasers and licensing partners during M&A due-diligence. The scalability of virtual data rooms also allows them to share large or confidential documents with internal teams and others. Additionally, they allow collaboration with outside counsel, auditors or consultants.
Utilizing a virtual information room for restructuring or bankruptcy due diligence is an excellent way to make the process easier with other participants. These transactions require a thorough review of the financial performance of the company, its debt, accounting reports and budgets for capital expenditures as well as legal contracts, liens and credit reports for customers. A strong data room security system is necessary to ensure that no one is able to access these vital documents and ensure the integrity of the transaction.
