Blog Cybersecurity Checklist for Mergers and Acquisitions

Mergers and Acquisitions (M&A) are pivotal moments in the life of any organization, laden with opportunities and risks. Any time an organization merges with another, a level of risk is accepted. Awareness of these risks enables the acquiring organization to properly value the acquisition and prepare for potential security incidents.

It is not uncommon for breaches to occur following an acquisition due to undiscovered vulnerabilities in the acquired company. Sometimes, these vulnerabilities are not discovered until years after the acquisition. This can result in disastrous outcomes for the parent company, including data privacy violations, penalties, and a damaged reputation.

To avoid this bad outcome, one key to a successful transaction is conducting a thorough M&A assessment. This evaluation uncovers critical aspects of the target company and positions the acquiring company to make well-informed decisions.

Let's delve into the value of an M&A assessment and how it can protect stakeholders. Performing cybersecurity due diligence during the M&A process is essential to safeguarding the security of the common entity, protecting the acquiring organization’s data and reputation, and making well-informed decisions. Plus, uncovering potential threats and vulnerabilities allows for a risk mitigation strategy and resolution.

Your M&A cybersecurity checklist

The following checklist outlines necessary items to consider during M&A activity to evaluate the risks at hand.

• Perform a risk assessment to understand and uncover any risks in the merging organization.
• Establish acceptable risk guidelines and develop a risk mitigation strategy to address identified threats before merging organizations.
• Identify existing technical debt to determine what it would take to overcome that tech debt and address related security concerns.
• Perform a penetration test and vulnerability scan to assess threats from an attacker’s viewpoint. The vulnerability assessment must include all assets — hardware, software, and a review of any open-source code and libraries used in development — to scan for known and exploited vulnerabilities.
• Perform a technology review which should include the following areas:
  • Security tools: Understand current tools and gaps in security controls.
  • Third-party risk: Perform a third-party risk assessment to assess the use of third-party tools or data shared with third parties.
  • Identity and Access Management (IAM): Identify current IAM technologies, policies, and procedures to analyze the controls in place.
  • Security incident review: Review past security incidents and the remediation actions taken to evaluate the effectiveness of risk mitigation and threat minimization strategies.
  • Asset inventory: Gather a comprehensive list of all assets, including physical, cloud, as-a-service apps, hardware, and software.
  • Data protection: Understand the types of sensitive data being stored, plus the policies and procedures in place to manage and protect this data.
  • Governance, Risk, and Compliance (GRC): Understand the GRC requirements and how they align or differ between organizations.

After conducting the initial assessment and security control alignment, organizations can implement connectivity and data sharing. To ensure these processes are secure, acquiring companies should establish trusted zones for connectivity. These zones should permit only vetted resources from the acquired company and enforce Zero Trust principles, such as microsegmentation, least privilege access, and verified connections.

Following this checklist paves the way for more secure, less risky M&A activity. By prioritizing cybersecurity due diligence and making more informed decisions, organizations can lay the foundation for a more robust and resilient future state.