M&A transactions often have inherent risks. While a considerable part of these risks can be discussed and negotiated upon, one aspect that definitely needs more attention is cybersecurity. When a company acquires another, it also acquires its vulnerabilities. Self-disclosures cannot be always relied on, and the acquirer is in charge of ensuring that the target company’s cybersecurity issues don’t become their problem after the transaction. That’s the essence of cyber due diligence. Since banks, investors and businesses often don’t have adequate experience of doing this check, they rely on companies like Elijah cyber due diligence for help.
What does cyber due diligence involve?
When an investor or acquirer hires a company to do cyber due diligence, they are entrusting them to do a complete review of target’s digital assets. The first step in that context is to identify various digital assets and determining the relevance of each. Next, the company will look into the cybersecurity program of the target, figure out the steps and stance they have taken towards their digital assets, and if these steps are actually enough. The third part is about evaluating cyber-risk-management plan of the target. This could involve understanding the work they have done with regards to protecting the IT parameters.
The fourth part is actually identifying breaches, if any, and whether the target has actually offered self-disclosure of all these incidents. It is also necessary to check how the target has responded to each of these incidents. The final step is to understand if the company has been keeping up with regulatory compliance and if they have been reprimanded by authorities in the past for cybersecurity related issues. Risks have to be evaluated, and the investigators will also find ways to quantify those risks, so that M&A decisions can be further discussed and negotiated.
Other things to know
Banks, investors, and acquirers may know about the assets of a target, but for a successful M&A deal, the relevance of evaluating cybersecurity cannot be ignored. In fact, cyber due diligence is a non-negotiable part of any M&A transaction and has to be done in time, before the final terms are drawn. If your company hasn’t really considered this aspect before an acquisition, you are possibly leaving room for many lawsuits, simply because all cybersecurity vulnerabilities become your implied liabilities. Check online now to find more on cybersecurity and companies that offer cyber due diligence services.