Cyber Security Due Diligence For Mergers & Acquisitions (M&A)
Cyber Security & Risk Contribute to Value
Mergers and acquisitions (M&A) are increasing as more companies look at business combinations and restructuring their operations.
M&As require a full audit of companies as part of the negotiation, with business valuation as a key consideration. Risk is an underlying factor for value, with cybersecurity playing an essential part in the evaluation.
REGULATORY UPDATE: The SEC’s rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure require public companies to describe their cybersecurity programs in their periodic reporting and how they manage RISK.
A Closer Look
Understanding the risk and security profile of a target company is essential. To prepare for an acquisition (M&A), target companies reduce expenses and maximize profits to look more attractive and increase their value. The acquiring organization must determine what liabilities or risks can arise under the target company’s cybersecurity program.
Due Diligence through Risk Profiling
- Compromise Assessment – Hunt for indicators of current malicious and suspicious behaviors. Determine if there are Indicators of Compromise (IoC) and their severity.
- Security Architecture Review – Review design of critical security controls and overall architecture. Discovery of a target and their adherence to security best practices, and the severity.
- Penetration Test – Identify confirmed vulnerabilities in the networks and applications. Are security controls effective? Has the target company’s M&A preparation compromised the organization?
- Security Advisory – Inherent risk profiling, targeted risk analysis, compliance quick checks, and remediation recommendations for an ongoing security program.
- Security Engineering Support – Design, deploy, and validate new security solutions.
- Threat Hunting or Managed Detection and Response (MDR) – Monitor and alert on identified threats for the network, applications, endpoints, and web applications in use. Real-time containment and remediation guidance.
- Sensitive Data Scanning – Determine the type, quantity, and use of sensitive information throughout the target organization, and how it is managed and accessed.
Auditing a potential partner for M&A risks is an important prerequisite to proceeding with a business combination. And once you complete your M&A, how do you assess what it will take to merge separate organizations and implement one cohesive cybersecurity program?
This assessment sets the stage for due diligence — the process of finding and mitigating security risks across an organization. Due diligence demonstrates the commitment of a company to keeping customer and confidential data safe, and organizations must be able to clearly identify due diligence efforts in the event of a breach or compromise.
As a result, any mergers and acquisitions cybersecurity plan must prioritize the creation, implementation, and reliable record-keeping of due diligence practices.
Why Choose HALOCK to Help Manage M&A Risk?
M&A cybersecurity offers unique challenges for organizations as they look to simultaneously manage and merge two sets of security best practices, policies, and processes.
The result is significant complexity that requires substantial time and effort to navigate. HALOCK helps companies streamline this process with a purpose-driven approach to security. Purpose-driven security speaks to the reasonable and appropriate implementation of mergers and acquisitions risk management policies. With HALOCK’s help, companies can focus on what matters most: confidently and compliantly completing mergers and acquisitions.
Put simply? Cybersecurity in mergers and acquisitions can’t be an afterthought — companies must deliver on cybersecurity due diligence to streamline the M&A process, ensure regulatory compliance, and reduce total risk.
We can help you through the entire process from pre-acquisition to post-acquisition to identify risks, remediation steps, and establish reasonable security based on Duty of Care Risk Analysis (DoCRA). Schedule a review to scope your M&A risk.
How do we manage risk in the evolution of AI in M&As?
To successfully approach managing risk in the age of AI, organizations using AI should incorporate reasonable security into their risk strategy.
Establish reasonable security through duty of care.
With HALOCK, organizations can establish a legally defensible security and risk program through Duty of Care Risk Analysis (DoCRA). This balanced approach provides a methodology to achieve reasonable security as the regulations require.
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