What is a Data Room?

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A Data Room is a space used to store data that is sensitive or of a privileged nature. It can be either physical or virtual. It is usually used to facilitate due diligence in M&A transactions. Due diligence is an important step in the M&A process and may require numerous documents. In most instances the information is private and must be stored in a secure manner.

A data room allows companies to store documents in a secure area that can be accessed by anyone with the appropriate permissions. Potential buyers can save time and money by looking through documents without needing to go to a physical location. Documents can be stored on the cloud, which makes them less prone to natural disasters such as fires and storms.

In the context of an investor data room, it’s a repository of information that is provided to investors ahead of an investment round or acquisition process. An investor data room can facilitate the process by allowing investors the ability to access relevant information, and also to perform due diligence on a business.

Investors will also want to look over any relevant legal documents, financial records and market research. They should also look up references and customer testimonials as well as the specific titles, salaries and descriptions of current team members. It is important to keep in mind that a data room should not be over-filled and only include the most relevant documents.