Cybersecurity risks can be a major concern for companies involved in mergers and acquisitions (M&A) and real estate transactions due to the sensitive and confidential nature of the shared information. Mitigating these risks requires reliable and secure communication channels.

A virtual dataroom (VDR) offers a secure and efficient solution for M&A and real estate transactions. Here are some ways dataroom software can enhance cybersecurity in these transactions:

Data Encryption

Data encryption is a fundamental security measure that protects sensitive information stored in a virtual dataroom during M&A and real estate transactions. It involves encoding data before it’s stored or shared, making it unreadable to unauthorized users.

In M&A deals, documents like financial reports and business strategies are often exchanged. These documents are encrypted in a VDR and safeguarded from potential breaches.

Confidential records such as property deeds or lease agreements can be encrypted securely in the dataroom during real estate deals. The software typically employs end-to-end encryption, which protects against interception or unauthorized access during transmission.

User Permissions

Access control is a fundamental feature of VDRs that strengthens cybersecurity during M&A and real estate transactions. In an M&A scenario, different stakeholders may require varying levels of data access.

The dataroom administrator can dictate who can access specific documents and data during a transaction. This feature enables the administrator to maintain confidentiality by controlling access and safeguarding sensitive data, allowing each party to view only relevant information.

User permissions allow VDR administrators to revoke authorized access if necessary. If a user’s role changes or leaves the company, their access can be immediately revoked, preventing potential data misuse. Discontinued access may also be required if a breach of confidentiality occurs during a transaction.

Activity Tracking

VDR software logs all user activities, providing an audit trail. This transparency helps identify suspicious behavior, offering an additional layer of security.

In an M&A, activity tracking provides a tamper-proof audit trail of all data room activities. This can be beneficial for business intelligence and compliance. The software records details such as who accessed what documents, when they were accessed, and from where.

Activity tracking also provides insights into user behavior. Certain documents frequently viewed during due diligence may indicate areas of interest or concern. A detailed record of all user interactions can be valuable for investigating security breaches or compliance violations.

Data Backup and Recovery

Companies exchange large volumes of sensitive data, including financial records, legal documents, and strategic plans. A VDR can store this data, providing a dependable backup and recovery system. 

Data backup involves creating duplicates of stored data in the virtual dataroom. These copies are saved in secure, offsite locations, providing increased protection.

If the original data is compromised, the backup can restore it. Data recovery retrieves lost or corrupted data from backups. It allows business operations to resume with minimal disruption following data loss.

Secure File Sharing

Secure file sharing allows for the safe transfer of confidential information, reducing the risk of data breaches during transactions. VDRs provide a secure platform for sharing documents, eliminating the need for potentially vulnerable email attachments.

Users can securely upload and review files without interception. VDRs also have features such as watermarking, time-limited access, and restrictions on printing or downloading to further enhance security.

Strengthen Security With a Virtual Dataroom

Cybersecurity attacks can compromise confidential files and documents. Implementing a virtual dataroom can help businesses safeguard their sensitive information through features like encryption and activity tracking. By using VDRs, companies can protect themselves from potential breaches or violations throughout real estate and M&A deals.