Mergers and acquisitions (M&A) activity increased in 2025. This is substantiated by a McKinsey Report that showed that in the first half of the year, ending June 30, the value of deals over $25 million increased 22 percent globally to $2 trillion, up from $1.7 trillion a year earlier.  Deloitte similarly reports that US M&A deal value in the third quarter of 2025 surpassed $600 billion, marking the highest quarterly total in almost four years. Key sectors driving this increased M&A activity included technology, healthcare, and pharmaceuticals, as well as financial services.

 

Be Careful What You Inherit

The primary objective of a merger or acquisition is to increase opportunities for business. However, M&A activity brings good along with the bad. Cybersecurity risks can easily transfer from the target to the acquiring company in an M&A because the target’s entire digital footprint is being transferred along with its assets. Some of these risks include:

  • Unpatched systems and legacy tech that can’t support modern controls and create exploitable gaps once networks are connected.
  • Hidden malware, backdoors, or advanced persistent threats (APTs) already present in the target’s environment that become active after integration.
  • Misconfigured cloud services, exposed APIs, and weak network segmentation expand the combined attack surface.
  • Overprivileged accounts, shared credentials, weak admin practices, and a poor offboarding process that attackers or insiders can abuse.
  • Undisclosed or poorly managed past breaches that may trigger regulatory investigations or mandatory notifications after acquisition.
  • Noncompliance with sectoral or regional rules  that becomes the acquirer’s problem once the deal closes.

 

The Need for Due Diligence 

The unfortunate truth is that inherited cybersecurity risks can quickly turn a promising acquisition into a liability. A deal driven by innovation that may seem spectacular on the surface can be compromised by inherited risks that can compromise intellectual property, stall product launches, or weaken competitive advantage. Even worse, a breach discovered post-acquisition will often require costly remediation, incident response, and customer compensation, directly impacting the financial promise of the initial merger or acquisition.

This is why due diligence is so critical. While financial analysts and business consultants evaluate the numbers, your team must thoroughly assess the digital assets and security posture being acquired. In most cases, that work should be led by an independent team of experienced cybersecurity professionals who can thoroughly uncover vulnerabilities, compliance gaps, and hidden incidents so the transaction reflects the real risk profile of the target and the integrity of the deal is preserved.

 

Pen Testing

If you want to truly uncover what lies hidden within the digital footprint of an acquisition or merger target, a penetration test is one of your most effective tools. Penetration tests do exactly what their name implies. They attempt to penetrate the underlying layers of the enterprise to uncover vulnerabilities before someone with malicious intent does. These time-tested assessments can cover every part of the target environment, including external systems, internal networks, wireless infrastructure, cloud platforms, and critical applications. A pen test conducted by an experienced professional will simulate how an attacker might break in, move around, or gain higher privileges. The findings are then documented into actionable insights that can be used to strengthen defenses.

 

Risk Assessment

In the same way that financial analysts can quantify the costs and benefits of a merger or acquisition, security risk assessments are used to rate the likelihood and business impact of any risks that are discovered. Identified risks are then translated into cost ranges in terms of downtime and cost of remediation. This allows the negotiating team to adjust price, negotiate specific indemnities or escrows, require remediation as a closing condition, or restructure the deal. The assessment also helps senior leadership create a unified set of protection and compliance priorities for the new combined enterprise.

 

Cloud Security

Security assessments can no longer focus solely on the physical infrastructure of a target company, as today much of its critical data and operations reside in the cloud. Without a structured review of the target’s cloud footprint, the buyer risks acquiring exposed data stores, over‑privileged identities, unknown third-party integrations, and shadow environments that can undermine both deal value and the acquirer’s own security posture after integration. That’s why it is essential to engage an assessment team with deep expertise across cloud platforms, since cloud vulnerabilities differ fundamentally from those found in traditional on-premises environments and require specialized scrutiny.

 

How Can HALOCK Help with M&As?

Don’t go into an M&A with digital blinders on. Know what you are getting into with HALOCK’s M&A services. HALOCK provides comprehensive due diligence services that uncover hidden vulnerabilities, undisclosed breaches, and compliance gaps before they become your liability. Our experienced team can deliver the thorough security assessment you need to negotiate confidently and close deals without unwelcome surprises.

 

Review Your Risk and Security Posture