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Minimising legal risks through digitisation: Why the right data room matters

May 10, 2024

In today’s era where data is the new gold, the security of transactional data has never been more paramount. With stringent regulations like the GDPR dictating the framework of data protection and privacy, companies are compelled to reassess their digital infrastructure. This article explores how digitisation, when executed with the right tools, such as the right data room provider, can significantly minimise legal risks, enhance data protection, and ensure seamless compliance throughout your business operations.

The importance of data protection and GDPR compliance

The General Data Protection Regulation (GDPR) serves as a critical standard for maintaining data integrity and security in deal preparation and transactions. As businesses increasingly rely on digital platforms to handle sensitive information, the imperative to adhere to GDPR standards cannot be overstated. One should never underestimate the regulatory penalties and fines linked to non-compliance with the GDPR either, which can reach 4% of annual global turnover or 20 million Euros (whichever is higher).

The use of a secure digital data room not only supports compliance with broad regulatory frameworks such as GDPR but also addresses specific legal risks that can jeopardise a transaction. Here are some of the main legal risks mitigated through effective digitisation, and the resulting transparency and usage reports:

  • Breach of confidentiality: Confidentiality is crucial for business transactions and the unauthorised disclosure of sensitive information can lead to severe legal repercussions.
  • Data theft: The risk of data theft is a significant legal concern for companies storing sensitive information and can have severe consequences.
  • Non-compliance with data transfer laws: With varying data protection regulations across jurisdictions, transferring data across borders can expose businesses to compliance risks.
  • Post-transaction liabilities: Legal conflicts might arise after the transaction, in which either the buyers or sellers could be held accountable if certain proof of the right to sell, the ability to buy, or the correct due diligence processes were not followed.

Location matters when it comes to servers

At the core of Drooms’ security strategy are its georedundant servers located within Europe, ensuring that all data is stored under stringent EU data protection laws. By hosting data on secure servers and data storage located within Europe – specifically in Germany and Switzerland – Drooms guarantees that data handling meets the highest standards of privacy and security. This compliance is not just about following laws; it’s about building trust with stakeholders and maintaining the reputation of businesses as secure and reliable entities in a volatile digital landscape.

Advanced data room security features to protect your data

The Drooms data room sets the benchmark for data security for transactions with its comprehensive suite of advanced security features. The georedundant and secure servers are complemented by robust SSL connections and AES 256-bit encryption, which safeguard data during transfer, thereby preventing unauthorised access or data breaches.

Additionally, Drooms offers advanced permissions settings, allowing clients to control access to sensitive information precisely. This is backed by extensive reporting capabilities that enable continuous monitoring and auditing of all data room activities, down to the document level. Such meticulous attention to security details ensures that every transaction is executed under the highest standards of data protection.

Closing deals with confidence

Securing transaction data post-deal is as crucial as protecting it during the preparation and due diligence phases. With the new Drooms Online Archive, the assurance of data integrity extends beyond the close of a deal. This innovative solution eradicates the traditional reliance on physical archives like DVDs and USB sticks, which are susceptible to damage, loss, and security breaches. They are also unsustainable.

Instead, all critical transaction data is maintained on secure and privately owned European servers, 100% powered by renewable energy. The Drooms Online Archive allows for immediate, anytime access to archived data, ensuring compliance with legal and regulatory requirements without the physical vulnerabilities. This not only streamlines the next transaction, when the data room can be reopened for a new due diligence cycle, but also significantly reduces liability and security risks. It also eliminates the additional CO2 emissions and electronic waste created by the production and transport of physical storage mediums.


Embracing digitisation with an advanced virtual data room significantly enhances the protection and management of sensitive transactional data, effectively minimising legal risks. Using advanced security measures and streamlined processes through digital solutions, Drooms safeguards every step from deal preparation to post-deal archiving. This approach not only ensures comprehensive data integrity and security but also facilitates swift and secure access to deal-relevant information. The transformative power of digitisation exemplifies how modern technology can be leveraged to maintain high standards of legal and regulatory compliance, setting a new benchmark for safety and efficiency in digital transactions.

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Corporate finance / M&A

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