What Is a Digital Data Room?
A digital data room is a valuable tool for businesses who wish to share secure information with potential investors. The information, though sensitive could be vital to the success of a company. This is especially true in high-stakes transactions like M&As and due diligence as well as capital raising. However, assembling all this information in a way that guarantees the information isn't misused, can be a lengthy process that can impede the business's ability to focus on growth and other important projects.
A digital dataroom is an online platform that allows multiple users to view documents and comment without the security. These virtual spaces are typically ISO27001-compliant as well as secure, meaning that they are invulnerable to attack by unauthorised individuals. They are also flexible, allowing real-time collaboration between all stakeholders. This allows businesses to rapidly collect data and move forward without a pause.
These platforms are typically used during M&A transactions because they streamline the due diligence process by providing a safe, easy environment for exchanging sensitive information. A digital data room provides security however, it also records all user activities in an audit trail. This reduces the risk that security breaches could occur.
The two primary kinds of digital data rooms are green and red. The red digital data rooms are extremely secure and designed to handle processes that require high confidentiality, whereas green data rooms are more transparent and designed for processes that require a balance of security and transparency like M&A due diligence.
