Virtual data room software is an encrypted repository that allows users to view confidential information in a safe environment during due diligence and other business transactions. It provides a high level of security protocols, that aren’t available on general file-sharing platforms. These include granular access rights for users, encryption in transit and in rest, two-factor authentication, watermarking content and audit trails that track logins as well as downloads and uploads. These features lower the possibility of theft of intellectual property and unauthorised access to sensitive financial and corporate information that could undermine agreements or trigger lawsuits.
A virtual data room is frequently used to share IP documents with external parties, including potential purchasers and licensing partners during M&A due-diligence. Virtual data rooms are also useful for sharing large files or confidential documents with internal teams and other stakeholders. They also allow collaboration with auditors, counsels, outside counsels, or consultants.
A virtual data room can be used to speed up the due diligence process for other participants in restructuring or bankruptcy. These types of transactions usually require review of a company’s financial performance and debt, as well as accounting reports as well as cash flow statements capital budgets for expenditures, legal contracts and liens, and credit reports. A strong data room security system is essential in order to protect against unauthorized access to the crucial documents and safeguard the integrity of the transaction.