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M&A Data Rooms vs. Copilot: The Hidden Leak Path No One Owns

Updated: Oct 5

Virtual Data Rooms are a hidden data leak path
Virtual Data Rooms are a hidden data leak path

TL;DR: Virtual data rooms (VDRs) are fortresses until your assistants start taking the tour. Microsoft 365 Copilot and similar AI helpers pull from Microsoft Graph across Outlook, SharePoint, OneDrive, and Teams. They can also index external sources via connectors. All of this “help” is permission-driven, but app-layer controls don’t always anticipate cross-app joins, over-broad sharing links, or connector scopes.


The result: an innocent query can surface deal docs far outside the room you thought was sealed. The fix isn’t more app rules; it’s a universal control point at the wire: a network-layer DLP proxy that pseudonymises sensitive deal data before the model sees it, rehydrates output for authorised users, logs actions without storing secrets, and triggers a private LLM for red-room moments.


Today we’ll map the leak path, cite what’s public, admit what isn’t, and leave you with a 30-day checklist and a board-ready drill.


  1. The Problem in One Minute

Here’s the simple version. A virtual data room (VDR) (think Intralinks, Datasite, Ansarada, Drooms, Venue, iDeals) is where bidders, advisors, and your deal team review confidential documents. VDRs enforce strong access controls, watermarking, IRM, and audit trails - inside the application. [1][2]


Copilot for Microsoft 365 sits somewhere else entirely. It retrieves what you can access via Microsoft Graph- mail, chats, files, calendars and, when configured, external sources via Copilot/Graph connectors. What Copilot can see depends on permissions, sharing links, and indexing scope across those sources. [3][4][5]


So the risk is not that VDRs are flimsy. They’re not. The risk is that the assistant connects worlds you thought were separate - like a helpful maître d’ with a master key. One over-permissive sharing link in SharePoint, one connector with the wrong ACLs, and Copilot becomes the most diligent (and indiscreet) analyst in the building. [6]


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  1. Where App-Layer Controls Break

App-layer DLP (Microsoft Purview) protects data within supported locations - Exchange, SharePoint/OneDrive, Teams, endpoints, and now Copilot-scoped policies. Good and limited. Policies are location- and activity-scoped, not a true “one choke point” across all agent calls, connectors, and cross-app joins. [7][8][9]


Consider sharing links. Microsoft supports Anyone links revocable but unauthenticated; access isn’t audited by identity. Even “People in your org” links spread fast. Perfectly normal. Perfectly risky in due diligence. [10][11][12]


Then add connectors. A Copilot connector can ingest external items into Microsoft Graph with ACLs tied to Entra ID or external groups. If you mirror a VDR index or even a shadow export folder Copilot can now retrieve those “external” items as if they lived in M365. [13]


Finally, remember index scope. Microsoft and MVPs advise restricting search to curated SharePoint sites when rolling out Copilot because “Copilot can access what users can access” and users often access too much. [14][15]


Apps enforce their own rules correctly. The trouble starts between them.


  1. A Real-World Pattern We Keep Seeing

Let’s ground this.

  • Copilot architecture is permission-driven. It pulls from Microsoft Graph and respects sensitivity labels and IRM rights. [16][17]

  • Oversharing is endemic. Recent large-scale analyses of M365 environments show exposed sensitive data is common fuel for assistants to surface. [18]

  • SharePoint “noise” is non-trivial. Beyond misconfiguration, even patched systems see waves of risk; recent SharePoint mass-exploitation illustrates how quickly content governance can unravel when assumptions break. [19][20]


Evidence note: I can’t find a public, certifiable breach where Copilot directly exposed VDR-resident M&A docs across tenants. That said, multiple credible sources show (a) Copilot retrieval is cross-app and connector-aware; (b) oversharing in M365 is widespread; and (c) live exploitation and misconfig in SharePoint/OneDrive ecosystems are routine. Together, these create a plausible leak path for VDR-adjacent material. To validate: run a controlled red team sim in your tenant using governed test data, connectors, and typical sharing defaults. [3][5][18][19]


Composite scenario (plausible, grounded):

  • A FTSE-100 acquirer runs diligence in a third-party VDR. Finance and legal copy “working sets” into SharePoint to annotate in Excel.

  • IR creates a “People in Org” link for a briefing deck; the deck references VDR filenames and a summary table.

  • A Copilot connector indexes a separate vendor portal used by advisors for Q&A exports.

  • A junior PM asks Copilot: “Summarise all EBITDA adjustments across bidder comments.”

  • Copilot dutifully joins the IR deck, working set spreadsheets, and connector items. A bidder-specific adjustment appears in the answer.

  • Every system worked as designed. The system-of-systems didn’t.


  1. The Wire Remembers What Apps Forget

Apps change. Policies drift. Projects sprawl. The one constant is the network path the request traverses. If you don’t control the wire, you don’t control the join. That’s the contrarian truth. A universal choke point sitting in front of Copilot’s calls can enforce the rules apps can’t agree on. [7][13]


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  1. Architecture: How Leaks Actually Happen

The path, step-by-step:

  1. Connector or index scope brings external items (Q&A exports, sync folders) into Microsoft Graph with permissive ACLs. [13]

  2. Cross-tenant share via “Anyone” or “People in Org” links quietly broadens the audience. Bid team members pass links through Teams chats. [10][12]

  3. Over-permissive join: The assistant merges snippets from mail, chats, SharePoint, and connectors in a single answer within the user’s effective permissions. [3]

  4. Copilot retrieval: The answer surfaces a bidder-tagged number from a working set, not the VDR. DLP may not trigger if the pattern isn’t a classic “copy/send” event in a covered location. [7][9]


Where Purview helps and where it can’t:

  • Helps: Blocking Copilot from processing labelled/encrypted content; DLP policy tips in Teams/Exchange; oversharing detection; restricted search scopes. [8][14][21]

  • Can’t (by design): Act as a universal in-flight scrubber across all agent calls and non-M365 connectors; guarantee tenant isolation for every cross-app join; provide a kill-switch that instantly neutralises a new leak path across apps. [7][9]


  1. What “Good” Looks Like (Network-Layer Design)

Minimum viable pattern for M&A:

  • Proxy in front of Copilot/LLM calls. All assistant traffic crosses a network-layer DLP proxy before touching Graph or connectors.

  • API-boundary pseudonymisation. Mask MNPI (material non-public information), PII, PHI in prompts/files; only rehydrate on return for authorised users.

  • Zero-trace by design. In-memory processing with no raw prompts/files stored; SIEM receives pseudonymised, audit-grade telemetry. [22]

  • Private LLM fallback. For red-room queries, route to a private model within your enclave; rehydrate only at the edge.

  • Payload hygiene. Strip steganographic triggers; block “Anyone” links in answers; normalise tool calls.


Brand, earned (not sold): AI DataFireWall™ by Contextul implements this exact pattern: network-layer proxy, pseudonymisation/rehydration, zero-trace, SIEM telemetry, private LLM fallback, and residency controls—without breaking user flow.


  1. Field-Test It: A 90-Minute Tabletop

Objective: Prove you can see the join, stop the leak, and switch to safe mode.

Injects (10–12 minutes each):

  1. Overshared deck: Teams link to an IR deck with “People in Org” scope. Query Copilot for “top 5 diligence risks.” Expectation: proxy masks bidder names; SIEM logs masked tokens. [10]

  2. Connector creep: Enable a Copilot connector to a “Q&A exports” folder with broad ACLs. Ask “compare bidder questions by theme.” Expectation: policy blocks external connector items containing MNPI; SIEM flags. [13]

  3. Red-room query: “Show working capital bridge by bidder.” Expectation: auto-route to private LLM; rehydrate for specific users.

  4. Kill-switch: Flip a policy that halts assistant access to finance sites. Expectation: measurable Mean Time to Neutralise (MTTN) under 2 minutes; user sees a clear denial reason.

  5. EchoLeak replay (lab safe): Send a crafted “prompt injection” email into a sandbox mailbox and confirm network policy strips exfil payloads before model access. [26][27]


SIEM queries to run:

  • Show top denied resources by site and label in last 24h.

  • List prompts with masked tokens > N per answer.

  • Alert when connector index adds >1,000 items in 1 hour.


Scoring: Track MTTD/MTTR/MTTN; % of masked prompts; incidents auto-routed to private LLM; false negatives.

Evidence note: Zero-click attacks like EchoLeak were patched by Microsoft after disclosure, but they’re a class, not a one-off. Treat this as an attack surface you measure continuously, not a historical anecdote. [26][28]


8. Objections & Clean Answers

“Purview already does this.”

Purview DLP is essential. It enforces policies in its supported locations and now scopes Copilot access to labelled content. But it is not a universal, in-flight scrubber across all agent calls, nor a geofencing gate for every egress. That’s why Microsoft also recommends restricting search when necessary. Use both. [7][8][14]

“Our tenant boundaries are airtight.”

They’re as tight as your links, groups, and connectors. “Anyone” and “Org-wide” links are designed for collaboration, not diligence, and connectors can expand your effective corpus. Verify by sim—not by faith. [10][13]

“Private LLM means we’re safe".

Private models reduce third-party exposure. They don’t solve oversharing, connector scope, or cross-app joins. You still need a policy brain at the wire.

“Designers handle the PDFs; we’re fine.”

Art isn’t security. The assistant pulls from sources PDFs never see—mail, chats, Q&A exports. Secure the join, not just the artefact.


Call to Action

Run a Copilot × Dataroom Risk Review with us. We’ll map your leak paths, sketch an architecture on one page, and run the 90-minute tabletop with your data (safely pseudonymised). You’ll leave with a cost-per-call model, a kill-switch you can demonstrate to the board, and proof that your assistants can work without walking your bidders through the vault. The wire remembers what apps forget. Let’s make it remember the right things.


References

[1] Intralinks VDRPro: “Security within VDRPro.” Intralinks Support (Nov 2024). https://support.intralinks.com/hc/en-us/articles/9188618267803  support.intralinks.com

[2] Intralinks VDRPro: “Document Security settings (IRM).” Intralinks Support (Apr 2025). https://support.intralinks.com/hc/en-us/articles/9504402885531  support.intralinks.com

[3] “Microsoft 365 Copilot architecture and how it works.” Microsoft Learn (Jan 2025). https://learn.microsoft.com/en-us/copilot/microsoft-365/microsoft-365-copilot-architecture  Microsoft Learn

[4] “Microsoft Graph overview.” Microsoft Learn (Jan 2025). https://learn.microsoft.com/en-us/graph/overview  Microsoft Learn

[5] “Data, privacy, and security & Copilot connectors.” Microsoft Learn (Apr 2025). https://learn.microsoft.com/en-us/microsoft-365-copilot/extensibility/data-privacy-security  Microsoft Learn

[6] “How shareable links work in OneDrive and SharePoint.” Microsoft Learn (Apr 2025). https://learn.microsoft.com/en-us/sharepoint/shareable-links-anyone-specific-people-organization  Microsoft Learn

[7] “Learn about data loss prevention.” Microsoft Learn (Jun 2025). https://learn.microsoft.com/en-us/purview/dlp-learn-about-dlp  Microsoft Learn

[8] “Considerations to manage Copilot for data security.” Microsoft Learn (Jun 2025). https://learn.microsoft.com/en-us/purview/ai-m365-copilot-considerations  Microsoft Learn

[9] “Microsoft Purview DLP—product page (scope/locations).” Microsoft (2025). https://www.microsoft.com/en-us/security/business/information-protection/microsoft-purview-data-loss-prevention  Microsoft

[11] “Sharing & permissions in the SharePoint modern experience.” Microsoft Learn (Oct 2024). https://learn.microsoft.com/en-us/sharepoint/modern-experience-sharing-permissions  Microsoft Learn

[12] “Best practices for unauthenticated sharing.” Microsoft Learn (Jan 2024). https://learn.microsoft.com/en-us/microsoft-365/solutions/best-practices-anonymous-sharing  Microsoft Learn

[13] “Connect external data to Copilot (connectors).” Microsoft Learn (Apr 2025). https://learn.microsoft.com/en-us/microsoft-365-copilot/extensibility/data-privacy-security  Microsoft Learn

[14] Tony Redmond, “How to stop Microsoft 365 Chat using sensitive document metadata.” Practical365 (Dec 2024). https://practical365.com/microsoft-365-chat-blocks/  Practical 365

[15] Varonis, “Ensuring a Secure Microsoft Copilot Rollout.” (2023). https://www.varonis.com/blog/copilot-security  varonis.com

[16] “Data, Privacy, and Security for Microsoft 365 Copilot.” Microsoft Learn (Aug 2025). https://learn.microsoft.com/en-us/copilot/microsoft-365/microsoft-365-copilot-privacy  Microsoft Learn

[17] “Microsoft Graph documentation.” Microsoft Learn. https://learn.microsoft.com/en-us/graph/  Microsoft Learn

[19] TechCrunch, “Hundreds of organizations breached by SharePoint mass-hacks.” (Jul 2025). https://techcrunch.com/2025/07/23/hundreds-of-organizations-breached-by-sharepoint-mass-hacks/  TechCrunch

[20] Microsoft Security Blog, “Disrupting active exploitation of on-premises SharePoint vulnerabilities.” (Jul 2025). https://www.microsoft.com/en-us/security/blog/2025/07/22/disrupting-active-exploitation-of-on-premises-sharepoint-vulnerabilities/  Microsoft

[21] “Data access governance reports for SharePoint sites.” Microsoft Learn (n.d.). https://learn.microsoft.com/en-us/sharepoint/data-access-governance-reports  Microsoft Learn

[22] “Copilot honors Purview Information Protection rights; zero-trace/logging guidance.” Microsoft Learn (Aug 2025). https://learn.microsoft.com/en-us/copilot/microsoft-365/microsoft-365-copilot-privacy  Microsoft Learn

[23] CJEU Schrems II (C-311/18) judgment (Jul 2020). https://curia.europa.eu/juris/liste.jsf?num=C-311/18  Curia

[24] European Data Protection Board, “Recommendations on supplementary measures.” (Jun 2021). https://www.edpb.europa.eu/news/news/2021/edpb-adopts-final-version-recommendations-supplementary-measures-letter-eu_en  edpb.europa.eu

[26] Dark Reading, “Researchers Detail Zero-Click Copilot Exploit ‘EchoLeak.’” (Jun 2025). https://www.darkreading.com/application-security/researchers-detail-zero-click-copilot-exploit-echoleak  Dark Reading

[27] Cybersecurity Dive, “Critical flaw in Microsoft Copilot could have allowed zero-click attack.” (Jun 2025). https://www.cybersecuritydive.com/news/flaw-microsoft-copilot-zero-click-attack/750456/  Cybersecurity Dive

[28] Trend Micro Research, “Preventing Zero-Click AI Threats: Insights from EchoLeak.” (Jul 2025). https://www.trendmicro.com/en_us/research/25/g/preventing-zero-click-ai-threats-insights-from-echoleak.html  Trend Micro

 
 
 

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