A data room is a secure place used to store confidential data such as legal proceedings or mergers and acquisitions. You can also use data rooms for secure file sharing. There are two types of data rooms: physical and virtual data rooms. The former is a physical room set up by a seller to store vital documents, and it is part of the due diligence process. The latter is a cloud solution for securing and sharing confidential files. Virtual data rooms (VDR) are cost efficienct, and they are quickly replacing physical data rooms. Read on to discover the type of functionality that a data room should offer.
- Security. Virtual data rooms provide the utmost security for your sensitive data. The security features of a virtual data room ensure that your confidential information is safe and secure. Most physical data rooms implement key card access along with fire control and several backups. When it comes to VDRs, they implement customizable user permissions for complete control. The documents a company shares will only be accessible to those you grant access to and at the right time. Additionally, you can encrypt your documents to protect them from a breach.
- Control. Virtual data rooms allow you to have complete control of your files. The security feature reduces the risk of human error by enabling you to ensure that only the right third party can view the right document at the right time. As a VDR administrator, you can configure security measures to meet your needs. For instance, you can disable the download ability to prevent a third party from printing your documents. These customized security settings allow control over who can access certain documents within the data room. Activity reports also allow you to track and audit the activity of users or documents.
- Ease-of-Use. During business transactions, it is critical for all your documents to be organized and easily accessible. Virtual data rooms allow you to create folders and uniquely organize them. This process allows shareholders and the allowed persons to access and review the documents quickly and efficiently. Numbered and well-organized folders can go a long way towards helping reviewers to find the documents they need. Most virtual data rooms also have search capabilities, which can also help to avoid delays. For those managing the transaction process, VDRs allow bulk file uploads and drag-and-drop options.
- Versioning. For complex transactions that may require you to revise documents, versioning is a helpful tool that makes files easy to find and review. The tool also allows you to find the latest revised document. As such, third parties can be sure that they are viewing the latest version of the file, and they will not waste time wondering if they have the correct version of a document.
Although the potential of virtual data rooms is unlimited, data rooms are useful for companies wanting to store and share their files securely. Since there are several data room providers out there, ensure you choose a trusted provider such as Firmex.
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