http://www.datazoning.net/6-important-points-for-virtual-data-room-reviews

A data room is a digital storage service that provides a secure place to store documents. It also comes with a variety of features that help with the due diligence. These features include annotations tools, granular access permissions, activity tracking, and watermarking.

A common use for a data room is to share security documents (SOC 2 docs and compliance certificates, etc.) with clients to assist in the due diligence process. Sharing this information with other parties before the deal closes is a great strategy to accelerate the due diligence process and decrease the risk.

Email is used by companies to share SOC 2 documents and other documentation. Although this is a good idea, it’s inefficient and creates version control issues. This is also unsecure, with the increase in attacks on email that result in compromised mailboxes, stolen credentials, and phishing exploits.

Many secure storage and file sharing solutions such as Box or Dropbox allow access to documents from any device and in any location. While they provide a good level of security, most companies or individuals need more than this. Sensitive documents used for due diligence, fundraising or negotiating deals should be saved and shared with software that has greater levels of security than the personal file-sharing software.

The most important question to inquire about a “secure data room” is whether it prohibits authorized users from sharing data with unauthorized people. Unfortunately, the answer is usually not. The majority of secure data rooms don’t even limit how many times the same credentials can be used to access the system. It is easy for people to re-use logins from their own devices or copy and paste the link into a browser on a friend’s computer.