The Cybersecurity Checklist That Could Save Your M&A Deal

Conduct early due diligence. Both entities must collaborate to assess the target company's current cybersecurity practices, internal IT infrastructure, and incident history to identify any weaknesses and security vulnerabilities. They might even want to bring in external auditors and cybersecurity experts specializing in M&A transactions.

Adopt risk metrics. Before making a plan, both entities must agree on an accepted level of risk and how this risk will be measured. Standardized risk metrics ensure that risk stays within the agreed levels, facilitating communication and collaboration at all levels of leadership in the new organization.

Establish a cybersecurity team. Create a dedicated team, bringing together experts from both entities to work together on addressing and managing potential cyber-risks. This will ensure that security practices are consistent across the entire new organization.

Develop a risk mitigation strategy. Based on the early assessment, the cybersecurity team can determine what procedures, processes, and technologies must be implemented to enhance the target company's cybersecurity posture before the entities combine. This plan should also clearly outline company policies and the roles and responsibilities across both entities for managing cybersecurity.

Plan for IT integration. Security measures are essential when integrating IT systems and networks. These include reviewing and enhancing current security architecture, implementing security policies, and testing for any security vulnerabilities. Adopting new tools and technologies to safeguard data during the integration process may be necessary.

Check for third-party risks. If external vendors are involved in the M&A process, ask them to detail their processes around managing and monitoring cybersecurity risks. The assessment must ensure vendor practices align with the target company's cybersecurity standards.

Establish identity and access governance and management. Implement strong controls so only authorized people can access sensitive information, digital assets, data, or systems — with different access levels depending on roles and responsibilities. This will help prevent or minimize hacking, fraud, internal data breaches, and human error.

Create an incident response plan. If a data breach occurs, organizations need a plan to minimize disruption to the business. It's essential to back up critical databases and store them off of the network to ensure data can still be accessed. The incident response plan should be printed out or distributed among staff so everyone knows what to do during a cyberattack.

Ensure ongoing monitoring. Cybersecurity doesn't end when the deal closes, and the post-M&A period can be a particularly vulnerable time for companies — so it's essential to be vigilant. That's why organizations need mechanisms for continuous 24/7 monitoring of systems and networks and real-time threat detection to identify security vulnerabilities and potential breaches.

Train employees. Ensure all employees of both entities involved in the merger or acquisition receive comprehensive and regular training about cybersecurity best practices. It's vital to communicate that each person can help play a part by watching out for threats and promptly reporting them. Consider conducting cybersecurity drills to prepare staff for what a cyberattack might look like.