Physical data rooms exist as a place to handle secure legal, financial and business transactions. Today, virtual data rooms are becoming more abundant as places to store, manage and share sensitive information online. Here’s what you should know about physical and virtual data rooms.
What Is a Data Room?
A data room is a room that contains a large amount of data that is usually private and confidential. This space may be monitored during normal business hours or on a 24-hour basis. The main purpose is data storage, but the room can also be used to exchange documents, share files or perform business transactions.
Security is a major feature of the data room. People who visit often are lawyers, accountants, bankers, and financial advisors. They perform different types of transactions from mergers and acquisitions and signings of contracts. The room is closely monitored, and an audit is necessary to record who has seen which documents and where. Anyone violating the rules of the data room will be asked to leave and could even face legal trouble.
How Is a Virtual Data Room Different?
A VDR data room is the online version of a data room. Instead of going to a physical data room, you and your business associates will log into an account online. A VDR can store a much larger collection of data than in an onsite building. VDR users store and share documents easily on secure Web pages. Their accounts are password protected with some requiring multi-factor authentication to prevent any unwanted person from opening it without your permission.
The same transactions that occur in a physical data room can occur in a VDR. Lawyers can perform the due diligence process, while bankers can negotiate loan agreements entirely online. In addition, the VDR is more affordable, secure and efficient to run on a website than in a building.
Picture a typical data room – it has solid floors and walls with endless shelves and files that contain endless amounts of data. Every person who enters is tracked and monitored. The documents you view may be read-only or unable to be edited or downloaded. This is all seems like something out of a James Bond film. However, people who visit data rooms are not super spies – they are normal professionals that you see every day – lawyers, bankers, etc. They are making use of physical and virtual data rooms to protect their business activities.… Read the rest