In the world of acquisitions and mergers, investors are just interested in profits. Sometimes, an acquisition may look great on paper and could be a lucrative deal for investors involved, but things may not go as planned if cybersecurity concerns are discovered. Disclosures are to be made in case of both acquisitions and mergers, but these disclosures are not always honest or in-depth, and that’s exactly where something like cybersecurity due diligence comes in the picture. For hedge funds, investors, bankers and venture capital investors, cybersecurity due diligence is of extreme importance in case of mergers & acquisitions.
What does cyber due diligence involve?
Companies that offer cyber due diligence help their clients in understanding cybersecurity history of the target company. They also look into issues that may have impact on the parent company and will determine the post-transaction risks and whether these risks are worth negotiating on. Identifying various information security risks is just one part of the job; cyber due diligence also focuses on data breaches that the target company may have had and if all of these breaches have been disclosed. The process also involves evaluating of the target company maintains a proactive stance towards matter of cybersecurity and the extent to which they can handle a cybersecurity incident. All remediation costs that may be involved will be evaluated, both financially and in terms of reputational impact.
Other things that investors must know
When it comes to M&A decisions, there is no room for taking responsibilities for risks that have not been disclosed or may impact the repute of the parent company after the transaction. Investors rely on cyber due diligence because they want to find lapses in cyber security and would want to have a measurable approach to the decision. For instance, in some cases, the aftermath of cyber due diligence could be about restructuring investments from scratch, because new matters related to IT security may impact the deal. For investors, it is also about demonstrating the commitment to data security to various parties and stakeholders, and cyber due diligence gives them a quantifiable way of doing that.
If your company needs help with cyber due diligence¸ you need to select a team that has extensive experience in the field, and as required, you can even ask for case studies. Check online now to find more details related to cyber due diligence and how it can impact your next M&A deal.