Mergers and acquisitions (M&A) can be an effective strategy for companies looking for growth. They bring together customers, assets, and intellectual property. However, they also bring together liabilities and risks including cybersecurity risks. Cyber due diligence is a vital part of the M&A decision-making process. It includes evaluating the target company’s vulnerabilities, past cybersecurity issues or incidents, and the way the company dealt with them. Here are some tips to help ensure a successful merger without cybersecurity risks:
Evaluate the Current Threat Landscape
It is important for the acquiring company to take a risk-based approach to cyber due diligence. Cyber due diligence is not as established no does it analyze standardized data as other kinds of due diligence. Because all deals tend to be the same, they do not require the same diligence level.
Acquirers must have a process to assess the current threat landscape and identify the bad actor that might target both parties involved in the transaction. Such landscape can vary by region or industry and higher due diligence is required by higher-risk transactions like acquisitions in some sectors that experienced recent attacks. Rather than depending only on data that the target company has provided, the acquirer should analyze the information available from outside the target. This is where Elijah cyber due diligence comes into the picture.
Adopt Flexibility with Frequent Acquisitions
Businesses that are actively taking part in deals like serial corporate acquirers or private equity firms have to deal with cybersecurity more frequently than others. Companies that frequent acquire must have established relationships with cybersecurity stakeholders within their organization. These companies may have versatile cyber deals playbook that can assist them with cybersecurity at every stage of the deal. As a result, they are more effectively able to manage cyber risk to targets and their existing portfolio.
Identify and Quantify
Cyber due diligence must disclose deal breakers for the acquirer. Some problems may lead a buyer to reconsider the value of the target and the price. Acquirers must identify and quantify these problems and push the target to address them before they close the deal or renegotiate the price and other terms. Renegotiating could be a chance to shift seller proceeds to remediation investment; however, the acquirer must plan for how the problem will be addressed following closing and during integration. The possible shift burden to sellers is likely to appeal to frequent acquirers who tend to make smaller deals and can confidently manage the risks.