A data room(sometimes called a virtual data room) is a place where your most sensitive information is stored, usually in some kind of warehouse facility.

How does it work?

A corporate data room houses everything from the contact list and contracts and financial statements. Relax, your online porn is not going to be there unless you haphazardly send it over. Good luck with that if you did(inside joke and one of many).

Think of a data room as a highly organized warehouse. Lawyers and corporate CEO’s engaging in mergers use them a lot. Data rooms also keep highly-sensitive banking documents in a private file.

No one can get access to this room unless they have authority and the passcodes.

An Example-Based on Real Events

That means that the hush-money payments you sent that person(the one you have been having the affair with and your partners knows) are safely tucked away where no one can get to them, except for your financial advisor and wife–LOL). You gotta love the dark and seedy underworld of politics-LOL.

Why Are Data Rooms Beneficial?

1) The first benefit(and probably the best)is there is no need to worry about a data breach. Only you have access to this room unless you give someone else the passcodes(which I strongly suggest you do not).

You do not have to run the risk of sensitive information being exploited. That means the skeletons in your closet stay. That means there is no way anyone can use the information against you(unless you are running for a congress or public office).

2) It is going to save you a lot of money, in the long run. You do not have to pay hundreds and thousands of dollars on security and privacy. You can use that money you saved for something else(like a lobotomy-just kidding).

3) The best part about a data room is that it is online. These are virtual online warehouses. Now, if you combine that with the cloud, you are going to save so much time and money.

4) Data rooms present a lot of advantages when speaking with clients and investors. You go into the data room and look up the file. No more of looking around endlessly for something.

The client does not have to wait for you to get everything together.

5) There is a high level of due diligence, especially if you are buying and selling online. The legal requirements are outlined for you. That way you know if you are doing something wrong. Spoiler alert: doing something wrong is bad, okay. I just thought I would let you know that.
Learn more about corporate data rooms and how they can be useful in managing your business.