Virtual data rooms are utilized by companies for a variety of reasons. It lets them securely and efficiently share data with other parties, unlike emails that could be intercepted and misused for malicious purposes. (Read: Nearly seven million Dropbox accounts have been compromised). This is especially crucial when companies are involved with acquisitions or other strategic initiatives in which data must be shared with all stakeholders.
Typically, data room sharing is utilized during due diligence but is now being utilized throughout the entire duration of a deal, either for restructuring or fundraising. This is advantageous for both buyers and sellers as it decreases the necessity for travel, and helps to save physical costs such as hotels and flights.
The first step to set up the dataroom online is to register an account, enter personal information, and adjust the security and notification settings. After this step is completed, you’ll have to choose which documents to upload. It is also important to upload them and arrange them in a logical way. This includes categorizing and using consistent document names. Then, it’s a good idea to create an index to aid users locate specific documents.
It’s beneficial to set permissions based on the amount of information that page each party requires. For instance HR professionals won’t require access to as much information as the CFO. It’s recommended to review permissions regularly and update them if needed. It’s also crucial to test your data room to make sure it works as expected.