What is a Secure Data Room?


Secure dataroom is an online collaboration platform that speeds up due-diligence and reduces the timeframe for M&A and deal-making while offering complete security. It lets both selling and buy-side teams to manage a transaction’s process from beginning to conclusion in a secure manner.

What makes a secure data room apart from file sharing sites like Dropbox is that it’s typically more targeted towards enterprises with the ability to group users, set specific permissions, and gain insight into usage via analytics (e.g. when, how and where the data is accessed. Some also come with more advanced features, such as the ability to stop the downloading and copying of documents (a big no-no) or even displaying documents on a screen which cannot be captured. Many have industry-leading encryption technology to encrypt sensitive data and provide multi-factor authentication to make sure it’s really the user trying to login who is requesting access to the data.

The most secure data rooms permit download of documents for offline viewing in PDF form. However, if you let users print these files on physical printers or allow them to save them to file drivers for various purposes they lose the protection which is applied to the original data within the virtual data room.

If you could extract these downloaded files from the data room or other systems and open them on a computer, without being connected to the Internet this would defeat the purpose of having an encrypted data room for M&A due diligence compliance, litigation, and other sensitive documentation that needs to be locked down to devices and not transferring to servers. We recommend a DRM-based system that locks files onto devices rather than servers. This makes it impossible to delete the files from devices and share them.

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