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What is a Secure Data Room?

A secure data room is an online collaboration software platform that helps streamline due diligence, shortening timelines in M&A and other deals while ensuring security. It allows sell-side and buy-side teams to manage the full duration of a transaction from beginning to end with confidence.

What is different about a secure digital room against file sharing websites like Dropbox is the fact that it’s designed for the enterprise with the possibility useful reference of grouping users, set granular permissions and gain insight into the use of your data through analytics (e.g. the frequency, manner and location your data is being accessed). Some have more sophisticated features such as the ability to stop the downloading and copying of documents (a big no no) or even the ability to display documents on screens that cannot be screenshotted. 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 log in who is trying to gain access to the information.

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

If you can download these files from a room or other system and then access them without access to the Internet it defeats the purpose of using data rooms to store sensitive documents for M&A due-diligence, litigation compliance and other documentation that is sensitive. The documents must be stored on devices and not sent to servers. We recommend a DRM-based solution which locks files onto devices, not servers. This means that it is impossible to remove them from devices and then share them.

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