The security of confidential information during financial transactions is paramount. Virtual data rooms are typically used to share and store private documentation in a secure environment with controlled access for users. They are usually used to perform due diligence in M&A transactions, but can be utilized for different purposes.

The best VDRs have a range of features to ensure that documents are stored in a secure manner and used throughout a transaction or a process. They can, for example include two-factor verification, which requires that not only the password is used, but also the actual information and codes unique to each individual user. This helps reduce the risk of data breaches that are caused by compromised passwords. Many VDRs also provide granular permissions that restrict access to certain files. IP restriction is another feature that limits access to virtual data rooms to specific IP addresses. This prevents sensitive information from being downloaded onto unauthorised devices, and helps stop leaks.

Certain VDRs also have watermarking, which is an unremovable identifiable identifier that is placed on every document. They also have audit logs which record all actions performed on the files in the data room. They can be used to find out who has been able to access or modify files, and they can also help in the investigation of data breaches. Other features that are beneficial include secure spreadsheet viewing, which ensures that the contents of Excel files can only be viewed by specified users.

Examine the certifications and standards of the data room https://dataroomanalytics.net/ to ensure that it offers the appropriate level security for your documents. It should be PCI DSS Level 1, ISO 9001 / ISO 27001 FIPS 140-2, MTCS Level 3. Some investment banks have an approved vendor list which lists data rooms they are pleased to work with. Choose a vendor who can prove these credentials along with a good reputation in the field.