Data rooms have become the standard in the M&A industry as well as other business activities such as capital raising rounds or initial public offering (IPO). They are very effective document sharing tools that facilitate secure and well-organized data exchanges between parties. When compared to cloud storage applications and other file-sharing options, they are more user-friendly, and offer superior features in terms of privacy, security and collaboration.

Data room providers offer comprehensive reporting and logging features as well as industry-leading encryption. This makes sure that all actions performed on the platform are recorded. This includes the time of access, which documents were watched and the number of times. The data is also stored in multiple locations and is accessible for retrieval even after the deletion of files. Other important security features of virtual data rooms are dynamic watermarks that appear on downloaded and printed files, role-based permission settings two-way syncing, automated indexing, timeouts during inactivity and virus scanning.

Additional features that aid in efficient collaboration in a data room include a logical folder structure with search capabilities, various languages, and a comments section where users can post their questions to other members. This allows for efficient communication and speeds up decision-making. Additionally, data rooms allow for granular user restrictions/permissions and allow for the monitoring of all login activity by checking IP, device and location to prevent unauthorized data access. Furthermore, they are an ideal tool to protect intellectual property because they prevent the disclosure of sensitive information guaranteeing business continuity with proactive IT support throughout the deal process by features such as watermarking, download restrictions and screenshot prevention.