The importance of cybersecurity is fast gaining importance within M&A due diligence. In fact, it may well be prudent to make cyber assessments in the acquisition evaluation process to avoid delays thereby impacting operations as well as revenue.
Privacy and data protection, which were long neglected in many business operations, are increasingly taking center stage. Companies that acquire, utilize, and keep personal data about customers, employees, and others must implement appropriate safeguards. Parties must examine the risks and potential liabilities connected with poor privacy and data security procedures in M&A transactions, whether due to regulatory infractions, real data breaches, or a variety of other difficulties. Even businesses that do not rely on personal data in their day-to-day operations must guarantee that their proprietary information is securely protected long before an M&A transaction occurs.
Because vulnerabilities in a company’s security framework or non-compliant privacy practices can imperil M&A deals if left unchecked. Hence, privacy and data security due diligence are critical. Buyers must carefully examine these risks during due diligence since this can have a major impact on a buyer’s valuation of a seller’s firm. Furthermore, flaws uncovered after an M&A transaction is completed may expose corporations to significant liabilities, including costly consumer class action litigation, intrusive government investigations, high remediation expenditures, and other costs.
For a transaction to run smoothly and efficiently, diligence management is crucial. Teams need assurance that their data is kept in a highly secure environment. Therefore, it’s important that a specially encrypted cloud-based hosting service, aka top-of-the-line security, must be included in diligence management tools.
M&A deals go through multiple evaluation stages. Companies share sensitive data during the merger process exposing themselves to data threats. This makes it important to ensure robust security checks at every point in an M&A transaction.
Meeting present-day security standards is an essential requirement for virtual data rooms.
A modern-day virtual data room must enable all stored documents to be encrypted and confidential. Multi-factor authentication for user login can reduce potential breaches.
An advanced deal management platform should be integrated with advanced monitoring tools that record viewer logins, files accessed, login times, and other invaluable reports.
Cloud security M&A
Cloud-native technology facilitates a safe environment for multiple users to collaborate and build trust in the platform ecosystem. More and more companies are acquiring a security-first approach to mitigate risks.
Security monitoring tools
IT teams must be equipped to frequently assess cyber threats in an acquisition lifecycle. Penetration tests are a secure and time-tested tactic to evaluate system security and conduct a full risk assessment. The tests simulate attacks on a computer system to discover loopholes in the security. These weak points are a gateway for third parties to access system data. If a system passes a penetration test, it can be safely confirmed that the platform is reliable and secure.
An M&A deal will certainly present imminent security risks. However, adopting the right security practices can help close a successful M&A deal in an effortless manner.
MergerWare supports a wide range of compliance programs and adheres to the best encryption and privacy protection requirements. MergerWare is a SAAS-based end-to-end deal management platform that is revolutionizing M&A with its cutting-edge security and superior data protection competencies. Through MergerWare’s partnership with Amazon Web Services (AWS) and Microsoft Azure, we aim to provide a more reliable experience for our customers. The dual capabilities of this powerful partnership keeps customer data more protected, personal and private than ever before.
Maintaining the confidentiality and protection of sensitive data, in our opinion, is vital and normally emerges in three phases throughout an M&A transaction. The seller must make sufficiently critical – business and personal – details accessible to bidders and buyers while appropriately safeguarding them during the pre-deal period. Second, as part of the due-diligence process, the prospective buyer assesses the entire firm, and the last phase includes the transition phase, during which data is moved or exchanged, or the two organizations’ networks are integrated while corporate operations are continued to be supported. MergerWare guarantees security at all key points of the transaction as well as ensures network, storage, host, and operating system security in all the phases of the deal process.