A virtual data room is a secure cloud-based platform that allows for multiple parties to view documents, exchange information and collaborate on projects without the risk of leaking confidential information or losing control of the document. They can be used to aid in M&A, strategic reviews and fundraising as well as internal document sharing.

The best online data rooms provide high-quality access controls, permission settings, custom analytics secure storage, and digital watermarking of downloaded files. They also offer a user-friendly environment that facilitates collaboration. They also offer templates, and ways to speed up uploading.

An important feature is redaction, which blacks out parts of a document to ensure personally-identifiable information stays private. Certain VDRs have a fence-view feature that covers the document in an electronic frame, thus preventing screenshots. Other features include two-factor authentication, IP and time access limitations, and a chat system that facilitates real-time communication between users. They are hosted by numerous service providers, and offer different pricing options such as pay-per-page and pay-per-user. They also offer an experience tailored for businesses that have unlimited users and large capacity.

An organized online data room will allow investors to feel assured that there won’t be unanticipated surprises, which are crucial to the process of negotiating a deal. It will also show the investor that you’ve considered the information you’d like to share, and that you’re committed to your business. This can increase the value of a business. It is vital that companies utilize an online data room when planning for a possible investment or exit even if they’re not sure how long it will take to conclude the deal.