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November 26, 2019

How to Prevent Cybersecurity from Ruining a Merger



Deloitte (News - Alert) recently released a report citing 79 percent of the organizations it surveyed expected to see a higher level of M&A activity in 2019. That's a 9 percent increase in M&As over last year. While more mergers tend to signal a healthy economy, becoming involved in the wrong one can quickly become a financial quagmire for your company.



One aspect of mergers which too many business owners fail to take into account until it is too late is the cybersecurity exposure of the target company. Failing to identify any possible cyber-related security risks can be a very costly mistake as several large corporations recently found out. Don't believe it? Then just ask Yahoo who had lower its price $350 million in the Verizon (News - Alert) buyout after the disclosure of multiple data breaches.

The need for awareness when dealing with potential online security vulnerabilities isn't only necessary for companies taking part in multibillion-dollar deals. Even companies involved in much smaller mergers need to be on the lookout for warning signs that the target company may have cybersecurity risks.

New Jersey IT services company Two River Technology Group recommends the following five steps to ensure you have all bases covered.

Cybersecurity: Five Steps You Need to Take When Thinking About a Merge

  1. Identify the most sensitive digital assets of the business. This is the type of information that most hackers would want to go after, and would cause the highest level of harm to the company's finances or reputation. Examples of this type of data may be customer payment information, confidential internal memos, and trade secrets.
     
  2. Evaluate the current level of cybersecurity. Complete a thorough online security risk audit to determine what precautions are already in place to protect against data breaches. Explore the history of any previous data breaches, and find out what has been done to avoid the same type of attack in the future. At this point, you may want to think about bringing in an outside cybersecurity expert to help determine whether these measures are adequate or if a complete overhaul is necessary to ensure appropriate protection.
     
  3. Assess the cybersecurity knowledge and procedures of staff members. Even the best software and network security systems are worthless if a company's employees either don't know how to keep the data of the business secure or are not diligent in following the guidelines that are in place. It is a good idea to look at the current cybersecurity training programs as well as review the protocols.
     
  4. Determine the cybersecurity risk of third-party vendors. Outsourcing IT is a critical part of the business model for most companies, but when it comes to cybersecurity, third-party vendors are often the weakest links in the chain. Doing this means you not only need to assess how safe outside providers are, but what type of data and systems they can access.
     
  5. Discover the current state of the company compliance levels with regulations. Not staying up-to-date on ever-changing industry compliance issues exposes a business not only online security risks but also leaves the door open for legal problems. A complete compliance audit is mandatory, starting with finding out the current regulations and determine if, and how the company is meeting these requirements.

Don't let poor cybersecurity ruin your next business deal. Get the facts, and don't be afraid of calling in an expert to help.



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