Data rooms are now standard in M&A as well as other business processes like a capital-raising round or an initial public offering (IPO). They are highly efficient tools for sharing documents that allow safe and organized data transfers between parties. They are more user-friendly than cloud storage applications or other file-sharing tools, and come with superior security, privacy and collaboration.

Data room providers have comprehensive logging and report functionality in addition to industry-leading encryption. This ensures that every action on the platform are tracked. This includes access times, who viewed what documents, and how often they were watched. This information is also stored in multiple locations and is available even after deletion of files. Other key security features of a virtual data room include dynamic watermarks that appear on downloaded and printed files, permissions that are based on roles two-way sync, automatic indexing, timeouts for inactivity and virus scanning.

Enhanced features that support efficient collaboration in a data room comprise the ability to create logical folder structures and search function, as well as multiple languages and a comment section where users can post their queries to other members. This facilitates effective communication and accelerates the process of 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. Additionally, they are the ideal tool for protecting intellectual property since they can prevent the leakage of sensitive information during the process of buying and selling by providing features such as watermarking, download limitations and screenshot prevention.