What Role Does Cybersecurity Play in Mergers and Acquisitions

COVID-19 has disrupted the business world and left many companies scrambling to adjust their operations. In the midst of this chaos, some businesses see opportunity. One way businesses are trying to take advantage of the current situation is through mergers and acquisitions (M&A).

M&A activity was already on the rise pre-pandemic, with a record $4 trillion in deals announced in 2019 according to Dealogic. And while the pandemic has caused a brief slowdown in M&A activity, experts believe that it will pick back up again in the coming months.

What role does cybersecurity play in all of this?

As businesses look to M&A as a way to grow, it’s important to consider the potential cybersecurity risks that come along with it. A study by IBM found that 60% of companies experienced an increase in cyberattacks after an M&A transaction.

There are a number of reasons why cyberattacks increase after an M&A. One is that hackers see M&As as an opportunity to exploit confusion and disruption during the transition period. Additionally, companies often don’t have the same level of security when they’re first starting out, making them more vulnerable to attack.

Another reason for increased cyberattacks is that M&As often lead to the consolidation of IT (information technology) systems. This can create new vulnerabilities that hackers can exploit.

Who has been responsible for the majority of these attacks?

 In 2018, a study by Kaspersky found that nearly half of all cyberattacks against businesses were carried out by organized crime groups.

What companies are most at risk?

Any company that is considering an M&A should be aware of the potential cybersecurity risks. However, there are some companies that are more at risk than others.

One example is healthcare companies. The healthcare industry has been a target for cyberattacks in recent years, and this is likely to continue as healthcare companies look to M&A as a way to grow. In 2018, Anthem, one of the largest healthcare companies in the US, was the victim of a major data breach that affected nearly 80 million people.

Another example is banks and other financial institutions. Financial institutions are often targets for cyberattacks due to the large amounts of money they hold. In 2016, Bangladesh Bank, the central bank of Bangladesh, was the victim of a cyberattack that resulted in the theft of $81 million.

So what can companies do to protect themselves from these risks?

There are a number of steps companies can take to reduce the risk of cyberattacks during and after an M&A transaction. One is to perform due diligence on the target company’s cybersecurity posture before the deal is finalized. This includes assessing their security policies, procedures, and technologies.

Another important step is to create a comprehensive cybersecurity integration plan. This should be done as early as possible in the M&A process and should address how the two companies will combine their security systems, processes, and cultures.

Finally, it’s crucial to keep communication open between the IT and security teams during and after an M&A. This will help ensure that everyone is on the same page and that any potential risks are quickly identified and addressed.

While there are inherent risks associated with M&A activity, these can be mitigated with proper planning and execution. By taking the necessary steps to assess and address cybersecurity risks, companies can increase their chances of a successful M&A transaction.

Cybersecurity is a complex and ever-changing field, which can make it difficult for companies to keep up with the latest threats. This is why it’s important to partner with a cybersecurity firm that has the experience and expertise to help you secure your systems.

Chris Turn