Mergers and acquisitions can represent extraordinary opportunities to grow client lists, to increase production efficiency, to consolidate fragmented industries, and to bolster balance sheets.
Successful mergers and acquisitions require immaculate buyer due-diligence, and not to be forgotten in this process is a review of the target company’s cyber security posture.
“…conducting cyber risk due diligence has become an essential part of the M&A process,” says Deloitte. Shockingly, 40% of acquiring companies discover a cyber security problem during the post-acquisition integration period.
Questions to ask of prospective target companies include:
- ‘Have security breaches occurred in the past?’
- ‘If so, what security protocols have been implemented since?’
- ‘What are the most vulnerable points of entry?’
- ‘What assets are the most valuable, and how are they protected?’
- How does the company diagnose and investigate red- flags?
The cost of addressing these issues can shred a deal in entirety, or lessen a deal’s monetary value.
When Verizon looked to acquire Yahoo in 2017, the disclosure of Yahoo’s prior security breaches shaved $350 million off of the deal’s price tag, reducing Yahoo’s gains by roughly 7%.
Fully understanding cyber vulnerabilities and risks will insure smarter transactions. Make the most of your investments.
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