Acquisitions and mergers are a part of business as companies team up, acquire and form new partnerships. However, M&A is often regarded as an overly complex and anxious procedure. It may take a lot to merge business practices, management, and several other factors by teaming two companies into one logical entity.
In the current business world, before and after the merger and acquisition, one real concern is- Cybersecurity. The importance of IT cybersecurity cannot be ignored in today’s time. And you cannot afford to compromise it during mergers and acquisitions. So, why make it such a big concern?
Cybersecurity threats have multiplied manifolds
Undoubtedly cybersecurity threats and breaches have enhanced exponentially. For example, according to a Cybersecurity Ventures report, in 2021, a business will be affected by a ransomware attack every 11 seconds. And the overall cost of ransomware will surpass $20 billion.
You may see reports of major phishing and ransomware attacks costing companies millions of dollars now and then. This year, the Colonial Pipeline ransomware attack led to the disruption that resulted in fuel shortage all over the United States east coast. In addition, it allowed the ransomware attacks on important services companies that impacted the entire world and spread disruption.
These potential cybersecurity threats and problems work as the backdrop for company acquisitions and mergers. According to Garner Report, it is estimated that 60% of companies involved in M&A actions mark cybersecurity as a major factor in the complete procedure. Also, around 73% of companies surveyed that technology acquisition was a major priority for the merger and acquisition actions, and 62% nodded that there was a major cybersecurity threat in acquiring new organizations.
Risks linked with M&A
1. Higher regulatory control
Amenability rules, such as cybersecurity, have become quite complicated and challenging for companies. For instance, regulators examine business agreements along with M&A to protect the rising importance of data sovereignty and information security.
From a cybersecurity point of view, organizations that merge or acquire other companies should make sure that data compliance is a major consideration to prevent non-compliance charges.
2. Inbred cybersecurity threats
Though they have a sturdy cybersecurity setting for their company, businesses should realize that security dynamics are fully amended with mergers and acquisitions. Hence, they receive the cybersecurity concerns and issues of the acquired organization,
When acquiring new business control, the acquiring company also receives the present susceptibilities, threats, and cybersecurity responsibilities.
3. Conceded accounts and passwords
As in the case of the Colonial Pipeline hack, the accounts and their passwords were compromised, leading to a data breach. Hence, organizations should acknowledge the security of the accounts acquired immediately and execute broken password security.
Scan the currently acquired environment to look out for password susceptibilities, reused passcodes, damaged passcodes, and other threats, and strengthen them as soon as possible by following the right cybersecurity attitude.
Merged or acquired companies can connect Active Directory accounts to access means. You can also choose password sync between local and cloud directory services. It further stresses the urgency to enhance password security as accounts acquire additional essential business data.
4. Loss of customer trust
Companies undergoing mergers or acquisitions should also consider their customer’s viewpoints. Any misstep may lead to the loss of customer trust.
5. Data breaches
As stated before, acquitting a company, either merging or acquired, gets all the cybersecurity risks and challenges of the new company. So, it is at elevated risk of a data breach.
How does IT security help protect from cybersecurity and compliance with Merger and Acquisition?
1. Set up a Merger and Acquisition Cybersecurity team
Companies have several reasons to go for M & M & M & M&A., But it can pose additional cybersecurity risks, as mentioned till now. Developing an M&A cybersecurity team is an efficient approach to speed up the cybersecurity proceedings in M&A. The team will be answerable to the CIO and should include the best cybersecurity employees of your dominant company.
The team should perform the duty to formalize the reporting structure to manage all the risks and threats of cybersecurity coordinated with M&A activity. The team will customize the business on both sides to maintain a continuous cybersecurity position.
2. Assess the objectives of the company’s cybersecurity spot
The IT security team you have created should review the company’s goals related to the cyber security position. The landscape of the cybersecurity of the company should have:
✔ Proper risks analyzation
✔ Evaluation of the security policies
✔ Recent audit reports
✔ Account audits and other reports
3. Assessment of the inventory
To find out the risks linked with cybersecurity during an M&A, companies should get an insight into all the inventory- either virtual, physical, or data. Then, discover and get a complete inventory of the goods to disclose the risks involved fully.
4. Assess the risk evaluation repeatedly.
Any merger and acquisition action taken by a company needs risk revision. Therefore, even a recent risk assessment will be changed after the M&A activity.
5. Hire third-party security help
Apart from having an in-house security team to manage the M&A cybersecurity necessities, you should also engage a third-party security company with sufficient knowledge and resources to help you explore, remediate, and put different security resources to the best use.
Some blind spots of merger and acquisitions:
1. M&A password security
Password and account safety is tough to manage during an acquisition or merger. Hence, companies should use tools to safeguard their native Active Directory infrastructure and other services. Keep the passwords under consistent scanning and alert if any misuse is noticed in the environment. In addition, companies should immediately rectify any loose password policies noticed in the company.
2. SSL Certificates
When you are undergoing merger and acquisition, it does not just involve physical mergers, but virtual mergers. Hence, it is suggested to use SSL Certificates to safeguard data transfer between two servers. The certificate encrypts the data transfer and does not let malicious people intercept in between to hack your precious data.
There are diverse types of SSL Certificates available from third-party certificate authorities. Popular ones are Symantec EV SSL, Comodo Multi-Domain SSL, RapidSSL Wildcard, Sectigo SSL cert, etc. However, you can choose the one as per your requirement.
By following the IT mentioned above security practices, you can strengthen your merger and acquisition procedure with any company. The practices will safeguard your data integrity and will not compromise throughout the process.