The primary reason to use a data room is to archive, share and track critical business documentation. They are commonly used in M&A transactions as well as fundraising, in addition to other due diligence processes. Unlike email or free file sharing services, they can be secured by using password protection and two-factor authentication, watermarks, and other security features. This is especially useful for companies that work with sensitive data, such as biotechnology or medical devices.
Authorized users are able to access a data room from any place with an internet connection including mobile phones and tablets. Users can access, download and print documents in the data room, or save documents for later review. They can also ask questions and receive notification when documents are uploaded or when there are new comments to documents. The data room can be searched and indexed, making it easy to locate information even if the information is scattered or poorly organized.
Create an organization structure for your folders that reflects the nature of your business or transaction to maximize the benefit of your data room. Be sure to clearly label your folders and documents and group related ones together so that it’s easy for potential buyers to grasp the whole picture. Also, consider creating an audit log in order to track who has viewed or downloaded the document and at what time. This feature is essential in proving digital storage as an asset in risk management strategies compliance with legal requirements or safeguarding intellectual property.