Decorative pattern

Seven things to consider when choosing a data room

May 2023

data room blog


Virtual Data Rooms are increasingly being used by companies for storing and sharing their confidential and sensitive information during important corporate transactions such as M&A deals and fundraising rounds, and when organising and managing information for their day-to-day business requirements.

Information security is now the highest corporate priority due to the increase in cybercrime, causing companies to think carefully about how best to protect their confidential information from data leaks, uninvited viewing or downloading, and malicious external attack. Companies recognise that a Data Room provides the high-level security they need; they no longer need to invite risk by using generic file-sharing systems, paper-based storage, or email to transmit sensitive information.

By increasing the prospects of successful outcomes in corporate transactions and improving business process efficiencies, a Data Room can significantly contribute to a company’s growth and development.  For a growing number of companies, a Data Room has become a critical tool at the centre of many of its business operations.

This is why choosing a Data Room that meets the company’s requirements is such an important decision.


Below we look at seven key criteria a company should consider when choosing a Data Room:


1. Being clear about needs and objectives

The starting point is for a company to be clear about it wants to achieve with a Data Room. Different companies will have different priorities: to ensure information security, improve company governance, enhance relations and engagement with investors and other stakeholders, make document management processes more efficient, or facilitate corporate transactions like an M&A deal or a fundraising round. A Data Room will facilitate all of these, but being clear about requirements will help the company to focus on choosing a Data Room that will enable it to achieve its objectives.


2. Identifying required functionality

The company needs to be sure that the Data Room provides all the functionality, to the highest standard, that is necessary for its business needs. Data Room functionality includes ease of access; permissions protocols; usage tracking, analytics and reporting; tools that facilitate document management; and processes for secure communication between parties. Storing and sharing information securely is very often a company’s top priority, so the Data Room should include security features such as data encryption at rest and in transit; two-factor authentication; audit trails of user activity; mechanisms that prevent unpermitted access and sharing of information, and compliance with international standards such as ISO270001 guaranteeing protection from hackers, viruses and third-party malevolence.


3. The provider’s industry experience

Different industries have different requirements for document security, confidentiality, and regulatory compliance. It is helpful if a provider has experience in the industry the company operates in and understands the specific issues and problems facing the company, especially if confidential data is being managed.  It is probable that the provider’s industry knowledge will inform the design of the Data Room and the company needs to be satisfied its features correspond with their specific needs. Companies regulated by a governing body such as the FCA should look for a Data Room with functionality that will keep their processes compliant. This can include providing an audit trail and version history of all content sent to stakeholders and being able to demonstrate that key information, such as risk warnings and policy documents, have been accessed and read.


4. The provider’s tech credentials

A company’s research should also consider the provider’s record and experience in technology development. This area of research should focus on which other companies are using the Data Room and what other experience the provider has in delivering secure online document management solutions for confidential data.  An experienced provider will be able to demonstrate their expertise and record through customer testimonials and case studies.


5. Ease of Use and Support

Not all users of the Data Room will be tech proficient, so selecting one that has an intuitive interface and is easy to set up and use is essential. Users will need training and support, so it is vital to choose a Data Room provider that includes set-up, configuration, training and ongoing support as a standard part of their package. Contacting the provider’s support team will help the company to evaluate how any future problems will be handled, such as the responder’s level of product knowledge and understanding of issues, as well as how helpful they are.


6. Set a budget and understand pricing

Setting a budget enables the company to evaluate the cost-effectiveness of the Data Room and focus on the cost-benefit of the functionality it provides. To be able to do this, the company needs to understand the pricing model and what it includes: the amount of storage capacity, the number of users, the type of documents it can manage, and the features included. An important question is how a change in the company’s circumstance will affect the cost, for instance, a requirement for an increase in storage or the number of users. The company needs to be comfortable that the pricing model is transparent, with no hidden extras that might unexpectedly appear further down the line.


7. Future proofing

A company needs to have an eye on the future when selecting a Data Room and choose one with the scalability to grow and accommodate the company’s requirements as these change over time. The many ways in which a Data Room can support the company’s long-term growth and development need to be factored into the decision: the company’s changing fundraising requirements on its journey from seed funding to IPO; its future M&A activity; providing the safe space for lasting and productive engagement with investors and other key stakeholders; strengthening customer relationships with personalised and branded customer portals for sending presentations, proposals, and NDAs, and for responding to RFIs and RFPs; and supporting sales growth by monitoring what clients are reading to focus the company’s time and effort on the products and services they are most interested in.

A Virtual Data Room is a hugely beneficial tool for every company that needs to store and share confidential information for specific transactional purposes or for efficient business operations. Choosing the right Data Room is a critically important decision for the company’s immediate and long-term prospects and needs very careful consideration.


Perivan has vast experience in working with confidential data and in developing and deploying solutions for sharing and publishing corporate information. Perivan has used this experience and expertise in developing the state-of-the-art Engage Data Room.

If you’d like to see how Engage can provide the solution to your Data Room needs, contact the Perivan team to arrange a demo and answer your questions.



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