Learn about the Power of Gathered Identities. The Future of the Identity Graph Starts Here >>

Planning A Merger Or Acquisition? Ask These Five Cyber Questions First

The upward trajectory of merger and acquisition (M&A) activity in 2024 is already unmistakable. Bolstered by a backdrop of stabilized interest rates and decelerating inflation, coupled with pent-up demand over the last couple of years, the conditions are ripe for strategic transactions.

According to findings from the latest EY CEO Outlook Pulse Survey, 98% of CEOs indicated plans for strategic transactions within the year. And the EY-Parthenon Deal Barometer predicts a 12% increase in corporate M&A deals in 2024 compared to last year.

Although the allure of financial gains and market expansion drives these deals, the digital age demands a rigorous assessment of cybersecurity risks accompanying such mergers. The fast-paced amalgamation of two entities magnifies the attack surface, merges diverse IT infrastructures and often uncovers discrepancies in security protocols—each a potential opening for cyber threats.

Unanticipated cyber issues, like dormant malware or inconsistent access controls, can transform an ideal transaction into a costly headache for the acquiring company post-merger, endangering critical assets like customer data, intellectual property and financial records. Such vulnerabilities underscore the importance of cyber diligence to prevent data breaches during the M&A process that could invoke severe penalties, cause reputational damage and erode customer trust.

Five Crucial Questions

For all these reasons and more, I recommend asking these five crucial cyber questions before finalizing any deal.

1. What is the target company’s cybersecurity posture?

Before proceeding with an M&A, it’s critical to conduct comprehensive due diligence to ascertain the cybersecurity landscape of the target company. This evaluation should encompass their current security measures, data protection practices, identity and access management protocols and incident response strategies. Identifying gaps in their cybersecurity posture not only helps in assessing the risks involved but also aids in valuing the deal appropriately. For instance, discovering lax security practices or a recent data breach can be a negotiation point to lower the acquisition price.

2. How will we securely integrate IT systems?

Merging IT systems is a delicate task that poses significant risks if not handled carefully. Develop a strategic approach that helps ensure the secure integration of technologies, infrastructure, identities and user access. This plan should include clear metrics for safely migrating data and a timeline that reflects the complexity of the combined IT ecosystems. The strategy must prioritize continuity and security, minimizing disruptions to operations and safeguarding against data breaches during the transition.

3. Are all employees on the same page?

The human element in cybersecurity is often the most unpredictable factor. It’s essential to align all employees on standard security protocols to mitigate risks like social engineering and phishing attacks, which tend to spike due to the uncertainties surrounding mergers and target human error. Conducting joint training sessions on cybersecurity best practices will help fortify the first line of defense—aware employees.

4. What are the potential disruptions during integration?

Merging IT systems can be complex, creating temporary windows of vulnerabilities. Pinpoint these critical periods early and plan accordingly by establishing robust security measures and quick response protocols. The integration phase should be closely monitored and include testing phases to promptly detect and address potential security lapses.

5. Do we have a clear plan for post-merger security?

Post-merger, it’s essential to establish a unified cybersecurity framework that incorporates the best practices from both companies. This framework should define comprehensive data governance standards, robust identity and access management protocols, regular security assessments and a dynamic incident response strategy.

Clear communication of this unified policy to all stakeholders, including the C-suite and board members, is crucial for maintaining transparency and trust. Cybersecurity is no longer a siloed IT issue—it’s a strategic business concern. Gaining the buy-in of C-suite executives and board members ensures that cybersecurity is aligned with the broader business goals.

Securing The Future

Brokering a profitable M&A requires more than just financial savvy—it demands a proactive approach to cybersecurity. By addressing these five critical questions, companies can not only secure their assets during the merger process but also position themselves for successful integration and sustainable long-term growth. Thorough preparation and strategic foresight in cybersecurity can be the difference between the success and failure of any deal.

View article here

The Power of
Gathered Identities

Book your free 30 minute demo now.