Data Rooms: What is Their History and How Have They Evolved?

What is the real history of data rooms?

Data Rooms: What Is Their History and How Have They Evolved?

Have you ever heard of a data room? Designating a secure virtual or physical space, data rooms can be used to address several issues in a company. The data room is used during the due diligence phase and serves to conserve sensitive data in complete security.

So, what is the history of data rooms and where do they come from?

The BIRTH OF M&A PROCESSES AND PHYSICAL DATA ROOMS

The first data rooms were born with M&A (mergers & acquisitions). This process, as we know it today, appeared in the 19th century. This era, called “The Great Merger Movement”, emphasized the importance of creating a physical data room to store sensitive documents on company information.

In practical terms, the physical data room was a room filled with filing cabinets containing confidential information on paper. The volume of information was substantial and strict security rules were defined in advance (no photos or photocopies possible, access by appointment only…).

Although physical data rooms were a significant step forward, they resulted in major difficulties and risks. For example, how to guarantee the security of this sensitive information placed in a single location? In addition, physical data rooms also posed the risk of theft and fire. 

VIRTUAL DATA ROOMS AND TECHNOLOGICAL EVOLUTION

Faced with the risks involved in physical data rooms, it was necessary to find other more secure solutions for data storage. Taking advantage of major technological evolutions, data rooms have undergone a digital transformation.

The pioneer of this trend was Sony, who decided to launch the CD-ROM for the first time in 1984. This step marked the transition from a physical data storage solution to a digital solution. Sony’s CD-ROM allowed for massive storage of information compared to floppy disks. The main interest of this innovation was therefore to easily store a large volume of data.

However, this storage solution still entailed certain risks, such as the physical loss of data and corruption. It was, therefore, necessary to continue to exploit technological advances in this area to perfect the storage of sensitive data. This was done in 1996 with the invention of the term “Cloud Computing” by George Favaloro of Compaq Computers, which allowed the storage of data online.

THE ARRIVAL OF THE ONLINE DATA ROOM AND DATA SECURITY

About 10 years after the invention of Mr. Favaloro, the giants of new technologies have seized this novelty. This is the case of Google, which presented the concept of Cloud Computing to a large audience in 2006 during a conference. Other companies followed suit, such as Microsoft, Amazon and IBM. It must be said that this new technology had a positive impact on M&A transactions in that it improved transaction speed and the security of sensitive documents.

However, virtual data rooms did not become commonplace overnight and faced many challenges. These included the provision of legal documents and some improvements in security and speed.

Today, virtual data rooms have become the norm and are used in virtually every due diligence process. Thanks to machine learning and artificial intelligence, the data room has been able to perfect itself and guarantee the security of the information stored.

DILITRUST DATA ROOM, A HIGHLY SECURE SERVICE (ISO 27 001)

DiliTrust’s Data Room provides a turnkey solution for the secure transmission of sensitive information, the transfer of large files, and collaborative work, among other benefits. Whatever the volume of your documents and their nature, the data room is ideal for building document databases instantly. It simplifies and secures the sharing of confidential or sensitive information.

Accessible in SaaS (Software As A Service) via subscription, DiliTrust’s Data Room does not require any installation on your premises. The solution is hosted on our ultra-secure technical platform and ensures a high level of availability.

To learn more about DiliTrust’s Data Room and how it can secure your data and save you time and money on projects, request a quote.