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Prepping for a merger or acquisition requires significant work and attention to detail, specifically when it comes to the security levels of both organizations.
Finding the right business during an M&A takes more than ensuring that you have a good cultural fit and solid business plans. Business leaders are familiar with ensuring technical details are also workable, but one area that might be overlooked throughout the due diligence process is cybersecurity. Both organizations must demonstrate a high level of awareness of their current cybersecurity posture and may need assistance identifying significant challenges and any remediation that may be required. Businesses are fully dependent on their data and business systems, and any problems can dramatically impact the value of the organization.
Everything from customer purchases to shipping is handled by business systems, making technology an integral part of operations. The security of customer information is a major concern, with a significant breach costing organizations upwards of $3.92 million according to a recent Ponemon Institute study. This type of charge has the potential to dramatically change the business value of an organization, shifting the M&A equation. Simply reviewing the M&A target doesn’t provide you with the full view of the picture that you need to manage the risks to your organization. Each organization also includes an interconnected network of vendors and partners, a virtual spiderweb of organizations — any of which could be the weak link that creates the opportunity for a cyber incident. The increasing reliance on data and business intelligence means more information is moving between organizations than at any time in the past, making these connections an integral part of your due diligence.
A single deep dive into a partner organization’s security and infrastructure isn’t enough to provide you a clean bill of health. You’ll need to schedule a meaningful review of the risks associated with IT security before, during and after the transaction. Small shifts in team makeup or platform stability can open the organization to vulnerabilities that could potentially cost millions to perform remediation, customer notifications and lost productivity. Consumer confidence in a brand is shaky at best, especially with the recent news cycle of continual breaches or data losses by organizations. A single cybersecurity incident may be enough to drive a vital portion of your market in the direction of a competitor — again, changing the value equation for any type of merger or acquisition.
Organizations grow organically, making it increasingly troublesome to determine whether you’re finding a true fit for your business. Rebuilding intrinsic data connectors and linking information in a meaningful way requires as much business strategy as technological savvy. Simply uncovering the legacy business rules that drive interactions with customers and vendors can be problematic, as it’s rarely something that is mapped as the organization grows. There is a substantial amount of work to be done before declaring that the two businesses will indeed be a fit in an M&A situation.
Protecting your organization starts with ensuring that any potential partners have a robust cybersecurity posture before making any final decisions. If you need assistance understanding how your business will meld with another or evaluating an acquisition target, contact the professionals at CIO Advise today at 833-CIO-ADVS or fill out our online form to receive a quick response.