Tips for Managing the Risks of Merges & Acquisition

Along with the benefits of capabilities and growth, mergers and acquisitions add new risks to your attack surface. Managing M&A risk should be part of your organization's overall risk management program. Mergers and acquisitions (M&As) are a unique type of business transaction that may be challenging and high-risk operations. 

As indicated by Forescout, companies that engage in mergers and acquisitions face significant cybersecurity risks or perceive cyber threats as their primary worry after the completion of the transaction. Furthermore, they concluded that the respondents from more mature firms that used more controls to minimize cybersecurity risk were less likely to have experienced a problem or incident (46%), showing that controls may play an essential function in reducing cybersecurity risks. 

Statista estimates that the overall number of M&A transactions reached 3,562 in the US in the third quarter of 2022. Furthermore, approximately a quarter of the overall value of transactions occurred in the technology sector.  

Exploring the Importance of M&A Cybersecurity 

Any security risks or liabilities, as well as any associated expenses, may be uncovered by conducting a cybersecurity due diligence examination. This will give you crucial data points to use in negotiations and determine whether the purchase fulfills your deal thesis. In addition, data breaches may pose a severe threat to mergers and acquisitions since they can result in the loss of sensitive information, financial loss, and brand damage. In this context, data breaches may occur if the acquiring organization lacks insight into the cybersecurity posture and procedures of the target firm or if the integration process is not adequately managed. 

Overall, several possible hazards must be adequately addressed to reach a successful conclusion. In this day and age, a company's cybersecurity posture is a crucial factor to consider in mergers and acquisitions, in addition to the standard risks involved. The following are some suggestions for reducing the risk of mergers and acquisitions from a cybersecurity point of view:  

With a consistent, easy-to-understand message on cybersecurity that can withstand scrutiny from potential buyers, you can get the best price possible and avoid unnecessary delays in the sales process. 

  • Evaluate the State of Cybersecurity at the Target Organization  

Before proceeding with an M&A transaction, it is essential to audit the target organization's cybersecurity procedures and infrastructure thoroughly. This involves reviewing the company's compliance with applicable legislation, evaluating its cyber defenses, and locating any possible vulnerabilities.  

  • Deploy the Capabilities of Gap Analysis 

Conducting a gap analysis is fundamental to identifying and mitigating M&A cybersecurity risks. A gap analysis compares the cybersecurity posture and procedures of the acquiring organization with those of the target organization and identifies any discrepancies or "gaps" between them.  

Define the scope of the analysis with specificity, including the systems and processes that will be reviewed. Then, Collect information on the cybersecurity posture and practices of both the acquiring and target enterprises, such as their security controls, policies, and processes, as well as their compliance with applicable requirements. Subsequently, identify any variations or "gaps" in the cybersecurity posture and practices of the two companies by comparing and contrasting them. Identify the risks connected with any detected gaps, including the organization's potential effect and the probability of the risk materializing. 

  • Establish a Solid Strategy for the Cybersecurity Integration  

It is vital to build a plan as part of the integration process to integrate the cybersecurity systems and practices of the target organization with those of the acquiring business. This should involve identifying gaps or overlaps in coverage and generating a road plan to resolve them if they have been found.  

  • Communicate with the Most Important Stakeholders  

It is of the utmost importance to ensure that critical stakeholders, like employees and customers, are aware of the M&A and the accompanying cybersecurity risks. This involves offering information for employees to identify possible hazards and mitigate those risks, as well as communicating any changes to cybersecurity policies or procedures that may have been made.  

  • Monitor and Evaluate the On-going Risks 

Since the risk environment for M&As is constantly changing, it is essential to maintain vigilance and a responsive stance toward new evolving risks. This entails regularly evaluating and monitoring the organization's cybersecurity posture and putting a comprehensive risk reduction plan in place. 

Moreover, it is essential to review and keep up to date with the policies and procedures pertaining to cybersecurity since mergers and acquisitions often result in changes to the organizational structure and operations, which in turn may affect cybersecurity. It is essential to conduct regular reviews and updates of the cybersecurity policies and processes to ensure that they align with the requirements of the merged firm.  

How Truvantis can Assist Businesses in Mitigating M&A Cyber Risks 

Truvantis can be a valuable partner for businesses looking to reduce the cybersecurity risks associated with M&As. By adhering to known best practices, companies may successfully manage the cybersecurity risks connected with mergers and acquisitions (M&As) and secure their systems and data from possible attacks. 

Whether it's conducting due diligence on the target company's cybersecurity posture or developing a cybersecurity integration plan, Truvantis has the expertise to help companies navigate the complex and risky landscape of M&As. Moreover, with our employee training and education services, Truvantis ensures that everyone in the organization is equipped to handle the unique challenges of M&A. 

Trust Truvantis to secure your organization's infrastructure, data, operations, and products and contact us to find out more about our offerings 

About Truvantis 

Truvantis is a cybersecurity consulting organization providing best-in-class cybersecurity services to secure your organization's infrastructure, data, operations and products. We specialize in helping our customers improve their cybersecurity posture by implementing, testing, auditing and operating information security programs.

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