Savvy business leaders know they can increase the likelihood of a successful merger and acquisition deal with thorough due diligence. Various checklists help guide entrepreneurs through the process and include looking into the target business’ physical assets, debts, market, corporate culture, and the like. One area of due diligence that is growing in importance is that of information technology (IT).
Businesses rely on IT now more than ever before. As a result, it is not surprising that cybersecurity threats are a huge concern for business leaders. From ransomware attacks to data breaches, IT experts predict cybersecurity concerns will cost businesses over $20 billion in 2021 alone.
Due to these high costs it is important to take cybersecurity issues into account when going through any business transaction. When it comes to merger and acquisition deals, a two-pronged approach generally works well.
Prong 1: Before the deal is finalized
First, dig into the target business’ cybersecurity practices. Complete an audit or put together a cybersecurity team to conduct a risk assessment. Check for any breached passwords. Did they have any issues? Was their IT compromised? If so, how much of an investment is needed to resolve these issues?
Prong 2: Afterwards
Make sure cybersecurity measures are in place to protect the business after the deal is complete. Take an inventory of all assets of the target company including the digital assets. Complete another risk assessment and make sure everything is in line with your expectations. Check policies and update as needed. Also take the time to educate the workforce on these expectations to better ensure compliance and reduce the risk of future issues.