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Data Room for Investment Banking: How to Pick (2023)

Kison Patel
Kison Patel

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

CEO and Founder of M&A Science and FirmRoom

M&A teams have been using virtual data rooms since the late 1990s. Due to technology advancements, VDRs are now more sophisticated, have features adapted to M&A, and are equipped to help speed up the deal lifecycle.

As the times have changed, FirmRoom has found a way to stay ahead of the curve and continuously revolutionize M&A.

This article details how VDRs are beneficial for modern investment banking deals, and how to choose the VDR that is right for you.  

What is an Investment Banking Data Room? 

An investment banking data room is an online repository that functions as a secure location for storage, and a place for sharing documents and data needed for investment banking deals.

Data rooms are largely used to assist with the due diligence process through sharing of legal information, fundraising, and collaborating with all necessary parties during M&A transactions.

VDRs are especially useful for investment bankers to gain insight as to which information is being viewed the most and what changes are being made by parties entering the data room using oversight analysis. 

Why Do Investment Bankers Use Data Rooms? 

When engaging in the process of an M&A transaction, investment bankers will need to collect and share a great deal of information with potential buyers and sellers. The most efficient way to do so is with the use of a data room.

They will first set up their virtual data room with an organizational structure that is easy to use and understand for all parties involved, sometimes with the advice of the founder. Investment bankers then compile a list of parties to add to the data room and give access to the information, such as buyers. After these buyers are added, investment bankers then individually review these buyers and evaluate additional company information.

The investment bankers also ensure that all diligence requests and questions from the buyers are answered and that information is shared in the data room as well. Once the room is set up and access is provided, investment bankers will continue to use the VDR to determine transaction timing to prepare the target, conduct due diligence, and also plan for successful integration.

Virtual data rooms provide value to both investment bankers and investors by facilitating a quicker and easier deal process, largely due to the impact that electronic storage of documents has on the timing of due diligence.  

Benefits of Investment Banking Data Rooms 

Investment banking data rooms have a versatile range of benefits across the investment banking profile, including M&A, capital raising, IPO underwriting and more. Here are some of the many benefits of using a data room in investment banking. 

Benefits of Investment Banking Data Rooms


The use of reputable investment banking virtual data rooms ensures that all compliance standards are met. This includes the use of ISO Compliance, FINRA Compliance, file backups, and strong encryption methods in the virtual data room itself. 


With the amount of personal information and financial documents included in an investment banking virtual data room, data security is of the utmost importance. This protects investment bankers and buyers alike.

Using an investment banking virtual data room such as FirmRoom, admins can assign specific access privileges based on a person’s role and responsibilities. This allows those involved with the company itself to make changes to the documents while restricting those outside the company with view-only access. The security of a virtual data room also eliminates the risk of third-party information theft. 


With the use of a virtual data room, investment banking deals are performed more efficiently and, ultimately, closed faster. Deal monitoring and compliance are made much easier when all of the necessary documents and information are in one place.

When everything is located in a centralized platform, there is transparency and investment bankers are free to focus on what they need to get the deal done. 


Virtual data rooms, especially those with project management features, allow for increased collaboration between investment bankers, buyers, and sellers. All activity in the room happens in real-time so users have access to updated information at all times.


The real-time analytics provided within virtual data room platforms allow for heightened oversight as to what information is the most useful for buyers, and what is being accessed or edited the most. This can be used to predict engagement levels as well as identifying problem areas before they occur. Access to this data improves transparency and accountability for all users. 

Version Control

Version control in an investment banking virtual data room allows control over who in the room is able to see what. Investment bankers can give users access to view the most current version, view all versions, or read only access, (without the ability to make edits). This speeds up diligence and eliminates confusion that may be caused if users do not know which document is the most up to date. 

Investment Banking Data Rooms vs. M&A Process Management Software 

Investment bankers are always looking ahead to the next deal and often choose technology and features that master the whole M&A process, not just a secure space, such as a VDR.

This allows them to steer every project from pitching to completion with full deal visibility and maximum control.

The difference between VDR and a M&A lifecycle software  include:

Investment Banking Data Rooms vs. M&A Process Management Software

How to Choose the Best Investment Banking VDR 

When choosing the best investment banking VDR, there are multiple factors to take into consideration. 

How to Choose the Best Investment Banking VDR

1. Pricing Structure

When choosing an investment banking virtual data room, the pricing structure is an important consideration.

Look for a data room that uses flat-rate pricing options that charge either monthly or annually, and include unlimited data, users, and overage charge protection.

This is superior to the traditional per-page pricing.

Per-page pricing models lend themselves to overage charges and extra fees due to file types that are data heavy, such as audio, music, and high resolution pictures, and the involvement of many users. 

2. Ease of Use and Intuitive Interface

When setting up a new software system, the platform should be easy to understand and have a short adoption curve, regardless of the level of familiarity of all members of the team.

Look for an interface that makes sense and offers customer service for any additional questions that might arise. That way, you can spend less time on the data room itself and more time on deal execution.

3. Speed of Upload/Download/Page Change in Viewer

Efficiency is largely based on the time spent on tasks. Documents should upload quickly into an investment banking virtual data room to avoid wasting time.

Features to look for include drag-and-drop upload, bulk file upload, and even integration with other file storage systems. 

 4. Detailed Audit Log Report and Report Visuals

Easy-to-use reporting ensures the banking team knows who is accessing and downloading documents, as well as who is logging in and what they are spending time viewing.

This can assist with tailoring the information to include items that buyers will find the most useful to complete a deal. 

5. Deal Specific Features.

Investment banking virtual data rooms are used for a large variety of tasks, including sell-side M&A, buy-side M&A, capital raise, strategic partnerships, bankruptcy and restructuring, loan syndication, IPOs and other transactions/secure data storage.

A VDR will need to handle all of these tasks and more to enable teams to stay organized and on-track for the entire deal lifecycle.

Some features that are helpful with this are smart features such as a non-duplication feature and smart text to quickly find specific documents.

6. Document Control.

Being able to control who can view or download specific documents is extremely important in preventing data breaches and ensuring that files and documents are viewed only by those who need to see them.

This can come in the form of digital watermarking, specific permissions, and single-sign-on options. 

Investment Banking Data Room Providers 

While there are many investment banking data room providers, these are consistently the top ranked among the industry. 

1. FirmRoom

FirmRoom is the top rated virtual data room and is heavily utilized by investment bankers at companies such as J.P. Morgan and Morgan Stanley.

FirmRoom features all of the essential functions of a virtual data room, such as drag-and-drop upload, bulk file uploads, and specific permissions settings. There are advanced search capabilities to facilitate document locating, which helps to streamline the due diligence process.

Real-time analytics allow investment bankers to see which documents were viewed and how much time was spent on each document. FirmRoom is fully SEC, SOC 2, and FINRA compliant, and place security as our top priority.

Flat-rate, rather than per-page pricing structure, results in a considerably cheaper price for deals requiring large amounts of data. 

Check out how much modern dealmakers save using FirmRoom, paying a flat-fee, relative to utilizing a per-page VDR provider. The results might shock you.

2. DealRoom

DealRoom is an advanced virtual data room and M&A project management platform, designed specifically for M&A transactions by those in the industry. DealRoom’s technology streamlines communication with drag-and drop upload, clear task assignment capabilities, and live-link documents.

Other features include advanced text search, auto indexing, PDF and Excel report production, and built-in communication as well as integration of external apps. DealRoom also utilizes the flat-rate pricing method to increase the value per dollar spent.

With DealRoom, Investment bankershave the ability to track time spent by each individual as well as investor engagement and areas of concern. Data, such as the total number of requests and a breakdown of those requests, is collected by DealRoom’s analytics features, and helps investment bankers to make necessary changes and provide information for a successful deal. DealRoom is is fully SEC, SOC 2, and FINRA compliant.

3. Intralinks

While IntraLinks is well known, it is not as well rated as other virtual data rooms utilized by investment bankers. IntraLinks is a financial technology provider for the global banking, deal making, and capital market communities. They facilitate mergers and acquisitions, capital raising, and investor reporting with streamlined operations, reducing risk, improving client experiences and increasing visibility.

IntraLinks offers AI-assisted automated setup, preconfigured workflows and real-time insights to identify and rate the most interested buyers. Further, IntraLinks offers mobile capabilities and an integration with Zoom. While a useful tool for investment bankers, its lower ratings are attributed to difficulties with Q&A features, a more complicated interface, and less advanced security compliances. IntraLinks also does not contain additional project management features. 

4. DataSite

DataSite is a semi-advanced VDR that has the ability to assist with M&A transactions. Features that stand out in DataSite include a tracker feature that connects to an index to align due diligence requests, integration with Gmail, Outlook, and other approved email systems, drag-and-drop uploads, AI automated target redactions, and smart tools and analytics. While DataSite is a functional data room, it also does not contain additional project management features. 

5. Firmex

Firmex is another VDR that is well known, and has a known strength in customer support. Firmex offers flat-rate pricing, advanced analytics, document watermarks, restricted viewing, SOC 2 security and encryption features, and 24/7 customer support. Firmex can be utilized by investment bankers for processes such as due diligence, compliance, and litigation. While Firmex is well rated, its security features have room for advancement, as does its organizational structure and user interface.


While there are many options for virtual data rooms for investment bankers, with the information from this guide, you should be able to decide if it is the right time to get started with a VDR and which one will be best for you.

At FirmRoom, we have been in the M&A space for decades, and we are here to help you spot your next opportunity sooner, close your next deal faster, and take that next step in your dealmaking journey.

Frequently Asked Questions (FAQs)

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Key takeaways

Virtual Data Room Comparison Guide

Compare VDRs and see the whole picture when it comes to choosing the best data room for your business.