Data rooms are a safe, efficient, and convenient environment way to store documents, conduct financial transactions and share files. They are an ideal location for storing sensitive data about major business operations or high-privilege paperwork like client or supplier agreements. Here is a detailed analysis of what you can safely store:
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What Is a Data Room?
A data room is an online storage space that businesses can use to keep information. This concept isn’t a new invention. Traditionally, almost every business used to have a safe room for storing all confidential company-related data.
Today, online data stores are a more intuitive solution. Accessibility, convenience, heightened security, and ease of sharing have made digital data stores more popular among businesses.
They help store the sensitive and delicate information required during financial transactions or legal proceedings. They’re primarily common during Mergers and Acquisitions (M&A), Initial Public Offerings (IPOs), among other transactional operations.
What Information Can I Store?
The type of information held in a data room differs depending on the intended purpose of the storage. Businesses can use investor rooms for storing investor information during financial transactions.
Here, we generally look at all the information you can keep on the platform for different purposes:
1. Financial Information
An investor room should contain sufficient financial information related to the business’s financial position. That helps your investors understand the business’s financial situation and set the right expectations. Some financial information to include is:
- Management accounts
- Cap table
- Profit and loss statements
- Audits
- Asset Catalog
- Financial projections
- Following year statements Pro-forma
2. Data for Initial Public Offering (IPO)
Issuing an IPO can require extensive paperwork. You’ll need investment bankers, attorneys, and other professionals to sign and verify your documents.
The room helps store the documents you’ll need for the IPO, easing access and utilization. Online rooms keep the documents secure and out of reach for any third party that isn’t involved in the transactions.
The availability of a view-only security feature means you retain all the rights to edit, copy, or print your documents. You can only grant secondary access to authorized users(even with QR codes).
3. Legal Paperwork
Court proceedings involve dealing with massive volumes of documents, some of which are highly confidential. A data store, especially a virtual alternative, allows you to keep these documents from unauthorized hands. These platforms secure your confidential and essential legal paperwork from the risks of getting stolen or lost.
Through the platforms, your attorneys, regulators, and any other relevant party can virtually access the information without the risk of misplacing any private data in the sharing process.
4. Company Documents
Most company documents, especially during client documentation, contain precious information that you wouldn’t want to lose. Keeping the information in a safe, accessible, and convenient place eases your business processes. Some of the documents you store in a data room include the following:
- Voting agreements
- Customer contracts
- Business plan
- Shareholder agreements
- Meeting minutes
- Partnership agreements
- Competency analysis
5. Technology Information
The data room can also help you keep technical data associated with your company. Some of the technical information to keep includes:
- Information regarding large integrations
- Screenshots of available company products
- API information
- Architectural diagram of the system
Due Diligence When Storing Information
A data room is a convenient place to keep all your data for legal, transactional, or any other use you deem fit. But you risk compromising your data if you don’t take all the necessary safety measures to protect it.
Here are some precautions:
- Only share your company strategies, secrets, and IP with trustworthy persons.
- Conduct background research on any person you share sensitive company information with, lest you spill your secrets to competitors.
- Discuss data usage and security protocols before sharing any information.
- Regularly audit the data store to verify that the security measures are effective and that the data is safe.
Use Data Rooms to Safely Store Your Business Information
Data rooms help you keep, share, collaborate, and edit sensitive or private documents for various business needs. They help companies to manage and protect their data and comply with regulatory requirements. Your company could drastically benefit from this highly secure, user-friendly platform. If you’re looking for increased data security and ease of collaboration, virtual data rooms are your solution.
