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M&A Process
Why should Cybersecurity be a priority in a Merger or Acquisition?
Technology disruption
Technology disruption assists companies to evolve into new business models and upgrade their traditional modes of operating business. However, with new technology integration, there is also a risk of unforeseen cyberattacks.
Dormant threats
Senior leadership must be vigilant in identifying dormant threats in the acquired infrastructure and implement effective mechanisms for mitigating them. Vulnerabilities must be found in advance to reduce the attack surface before they can harm the acquiring company.
Information Technology (IT) resiliency risk
During an M&A process, IT resources are over-burdened as they try to run a smooth integration between entities, thereby leading to extended periods of IT change gap, and subsequently, a significant attack surface.
Data security
The acquiring and the target companies both have critical data in their repositories. The acquiring company must determine the cybersecurity posture of the target company to mitigate the risk of a data breach.
Steps to Create a Secure M&A Process
Before the M&A Process Begins
Steps to follow to prepare for a more secure transfer
| identify the legal and regulatory compliance required of the target company | What business risks are you or parent company subjected to in the event of a merger or acquisition? | identify the necessary controls and potential risks of entering into a merger or acquisition. | Identify the early risk indicators, your CISO or Security Analyst can assist you in accessing publicly available information, threat hunting, and breach risk |
| Purpose is to identify regulatory compliance issues and penalties | To identify risks specific to this business and determine acceptability. | Due diligence of controls state and subsequent requirements post acquisition | Identify risks before process begins to uncover and mitigate potential breach and threats. |
During the M&A Process
Steps for a more secure M&A transition
| Determine the type of integration to align with security strategy in-sync with acquisition | Establish roles for cybersecurity matrix (RACI/Kanban) during M&A process based on integration needs. | Actively conduct ethical penetration testing and other methods to disclose vulnerabilities | Review cybersecurity process and procedures of company to align with requirements. |
| To create risk management strategy | To have well defined roles and responsibilities throughout process | To knowledgably identify and document threats and breach potential. | To effectively manage risk and tailor framework |
After the M&A process
Steps to a more secure combined business post-M&A
| Identify KRI for ongoing monitoring and compliance | Mitigate risks, remediate vulnerabilities, and establish guidelines for continual improvement | Determine governance model for compliance and incident handling | Full onboard of target infosec resources and services; Identify what to keep or not keep; Align and integration |
| To monitor risk levels continuously to maintain acceptable limits | To treat risk successfully while continuing to strengthen posture | To ensure incidents are identified and handled | To integrate what works and maximize acquired resources |
Managing cybersecurity during M&A cannot be a one-time activity, but needs to be an ongoing process throughout the entire acquisition lifecycle. The more due diligence a company performs with respect to cybersecurity during a M&A, the better their outcomes are when it comes to reducing risk, protecting the company’s assets and ensuring a smooth transition.