A virtual data room is a secure cloud-based system that allows several parties to view documents, collaborate and communicate on projects without risking confidential information or losing control over the file. They can be used to support M&A, strategic reviews and fundraising as well as internal document sharing.

The most effective online data rooms can provide advanced access controls, permission settings, bespoke analytics as well as secure storage and digital watermarking of downloaded files. They also offer a collaborative environment that is easy to use. They also provide templates and ways to simplify the uploading process.

An important feature is redaction, which blacks out parts of a document to ensure personally-identifiable information stays private. Some VDRs provide a fence-view feature that covers the document in the form of a digital frame, which prevents screenshots. Other features include two-factor authentication, IP and time access restrictions and a chat system which allows real-time interaction between users. They are hosted by a wide range of providers. They also offer different pricing policies such as pay-per-page, pay per-user and a bespoke experience for enterprises with unlimited users and large storage capacity.

An organized online data room will help investors feel assured that there won't happen any hidden surprises, which is essential to a deal's process. It also proves that you've considered what information you'd like to provide and that your business is serious. This will increase your business's value. It is imperative that companies make use of an online data room in preparation for an investment or exit even if they're not certain of the time it will take to complete the deal.