M&A Professional Working on a Data Room

What is a data room?

A data room is a secure place to share documents. It allows information to be disclosed to specified individuals, while minimizing the risk of it being seen by anyone else. Data rooms are therefore used in mergers and acquisitions (M&A) and other sensitive business transactions, for some legal processes, and also for general file sharing and storage.

Historically, data rooms were physical rooms containing hard copy documents. Today, most data rooms are secure websites. These are sometimes called virtual data rooms (VDRs). Being software-as-a-service (SaaS), they can offer more customized levels of security, and supporting features in addition to basic file sharing.

Types of data rooms

Secure place to store and share documents

Physical Data Room

Physical data room
Physical Location

Virtual Data Room

Virtual data room (VDR)
SaaS platform

Who uses data rooms?

Data rooms are essential to M&A. Users of an M&A data room will include corporate development teams, investment bankers, private equity professionals, and legal teams. Data rooms are also vital for initial public offerings (IPOs), as these require both transparency and confidentiality.

Data rooms may also be used in company audits, by providing a single secure repository for all the documents that the auditors, accountants, lawyers and regulators need to see. Collaborative business projects may also use data rooms to centralize key information. A business might also use a data room simply for file storage and sharing.


Investment Bankers








What features should be included in a data room?

Here are the key features you should look for when choosing a data room:


Preferably ISO 27001 and SOC2 certifications, and high quality data encryption.


Flexible permissions

The ability to set different levels of access based on role.

Data Backup

Data backup

Preferably involving multiple servers across multiple locations.

Bulk Upload

Smart bulk upload

Being able to retain file structures saves a lot of time.

Auto Cats

Automatic categorization

To help you file everything in the best place.



Hiding sensitive information in documents with the option to disclose it later.



To guard against illicit copying/sharing of documents.

Optical Character Recognition

Optical character recognition (OCR)

To make scanned documents searchable.



Many deals will involve documents in multiple languages.

Q & A

Q&A process

A data room makes this quicker while reducing risk of errors.



Track a project's progress and findings.

Why should you use a data room?

The main reasons to use a data room for transactions are:

  • Security
  • Risk management
  • Efficiency
  • Speed
  • Easy to use
  • Protecting deal value

There are alternative forms of file sharing, such as email, drop-boxes, cloud drives, and thumb drives. However, these cannot prevent illicit viewing, copying or printing of their contents. There are also alternative ways to manage due diligence processes, such as spreadsheets. But these make collaboration difficult and less secure. Version control can be a major problem. It's also possible to collate due diligence findings without a data room - but again, the process is far more onerous and brings an additional risk of data breaches.

For sensitive transactions such as M&A, only a data room can enable genuinely secure file sharing combined with efficient process management, collaboration, and gathering of due diligence findings.,

Security & Risk Management

Security & risk management

Speed and Efficiency

Speed & Efficiency

Easy to use

Easy to use

Deal Value

Protecting deal value

How do you create a data room?

You can set up a data room in just a few steps. At the simplest level, these are:

  1. Find a data room provider
  2. Upload the documents you wish to keep in it
  3. Categorize and index the contents in the most suitable file structure
  4. Redact any information that users should not see (or should not see yet)
  5. Create roles (i.e. define the different types of users who will need access) and set their permission levels
  6. Import any checklists you need to manage and track the project

If you have any additional questions about data rooms, feel free to contact us.

What is a data room?
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