Data rooms can be used for different circumstances and motives however, they’re most commonly used during mergers and acquisitions (M&A). A data room is a safe repository in which both parties to a transaction can access and review the information. It’s set up with a variety of security measures to protect sensitive data, such as encryption and fire walls. A data room is often used to share sensitive business information, like legal contracts, financial documents as well as other business-related information that is confidential.
Many data room providers are geared towards M&A deals and offer many features designed specifically for these types of projects. Some are costly, but some have subscription models which permit unlimited users.
The most common data rooms feature a clear and organized folder structure, a powerful search engine that can locate keywords and phrases within both the file names as well as the contents of the files, and the capability to add notes or remarks to a document. It is crucial to include a tool for Q&A so that users can get answers and ask questions in a unified setting.
Other features include a function for watermarking that shows who viewed or modified files and an auditing tool to monitor activity and changes and also granular settings for permissions for groups and individual users. Some data rooms also have an advanced function called «redaction,» which blacks out parts of files so that personally-identifiable information isn’t shared.