M&A Deals: A Bullseye for Cyberattacks

 M&A transactions are a prime target for cybercriminals. While executives might think of cyber threats as planned attacks, hackers become active as soon as a deal is announced, probing for weaknesses. The period from announcement to integration creates heightened risk due to:

  • Increased network activity: Employees from both companies ramp up activity, potentially exposing vulnerabilities.
  • Sophisticated attacks: Hackers use advanced techniques like deepfakes to steal confidential information like intellectual property.
  • Ransomware and extortion: Criminals may lock down systems with ransomware or exploit resources for illegal activities.
  • Undocumented backdoors: Unpatched systems, legacy devices, or forgotten web portals can provide easy access points.
  • Supply chain vulnerabilities: Tens of thousands of system interfaces create opportunities for attackers.

Cybersecurity Due Diligence is Crucial

For a successful M&A, both buyer and seller need thorough cybersecurity due diligence.

  • Buyers should:
    • Identify security issues early.
    • Estimate costs to address potential problems.
    • Evaluate the target's security systems, policies, and practices.
    • Assess the target's security culture and employee training.
    • Review data security and compliance procedures.
  • Sellers should:
    • Identify and address security issues before negotiation.
    • Develop a plan for integrating their security posture with the buyer's.

Post-Merger Integration Requires Strategic Planning

Successful integration requires a focus on five key areas:

  1. Value Capture: Identify areas for security improvement that will enhance return on investment.
  2. Vendor Rationalization: Optimize cybersecurity services and potentially adopt cloud-based solutions for efficiency.
  3. Integration Mapping: Strategically map critical systems and resources for protection.
  4. Target Operating Model: Design a new operating model that considers security risks and resource needs.
  5. Separation and Integration Planning: Develop a detailed plan for separating and then integrating the companies' IT infrastructure while minimizing security risks.

Proactive Measures are Key

  • Monitor news and the dark web: Track media coverage and monitor the dark web for leaked information or attempts to sell stolen credentials.
  • Conduct penetration testing: Go beyond basic security measures and implement proactive monitoring to identify and track attempted intrusions.

Conclusion

Cybersecurity is a critical factor in successful M&A deals. By prioritizing cybersecurity due diligence, strategic planning, and proactive measures, companies can mitigate cyber risks and ensure a smooth, secure transaction. As cyber threats continue to evolve, M&A executives who prioritize digital security will be better positioned to achieve their business goals.

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