Is your company’s secret data safe during a merger? Understanding the cyber risks in UK mergers and acquisitions (M&A) is crucial. This is due to the danger of data breaches. Sensitive stuff like intellectual property and customer details are at risk.
Not tackling these risks can hurt your revenue and brand. EY offers help to ensure cybersecurity is part of the whole M&A process. They protect data from start to finish.
For Chief Information Security Officers in the UK, M&A cybersecurity is a big test. Their job is to keep the merged company’s digital and physical stuff safe. This means making sure security measures and cultures from both companies match well.
There are hidden dangers that could cost money and damage reputation if ignored. Doing thorough checks and risk assessments is key. It helps to blend the cybersecurity efforts smoothly in M&A.
Understanding Cybersecurity Risks in M&A
Mergers and acquisitions require a deep look into potential cybersecurity issues. A Forescout survey found 62% of companies face big M&A risks due to cybersecurity. These often show up as technical flaws, privacy issues, and attack risks. It’s vital to handle these challenges well. For example, a big telecom faced a $350 million price cut after a breach exposed over 1 billion accounts.
Highlighting the need to focus on cybersecurity in deals, 53% of companies saw major cybersecurity problems during M&A. These issues can threaten the entire deal. For example, in a merger from April 2020, 5% of the sale price was set aside for possible ransomware attack costs.
To lower M&A risks, companies take steps from start to finish. This includes making a RACI matrix for InfoSec tasks and doing threat checks. By 2022, 60% of organisations will see strong cybersecurity as key in M&A checks. This shows how important these risks are becoming.
Yet, under 10% of global deals now look closely at cyber security, showing a big oversight. Leaders must watch for risks from new tech like AI and smart tech. Not doing so can seriously lower a company’s value.
To wrap up, dealing with M&A risks means carefully managing cybersecurity threats. With cyber threats set to go from $600 billion in 2017 to $5.2 trillion in five years, acting early and all through the M&A process is critical.
The Importance of Cyber Due Diligence
In the world of buying and selling companies, cyber due diligence is key. It’s about checking for weaknesses in a company’s cyber defences and active threats. The goal is to find problems that could hit finances, reputation, and operation hard.
Take the example of Marriott International Inc. They were fined £18.4m by the ICO in 2020. This was because of a data breach after a cyber-attack. It shows why due diligence in cybersecurity is a must in M&A. Missing hidden threats can lead to big fines and harm.
Cyber due diligence looks at many things. It reviews what information a company has, checks past breaches, sees how they’d recover, and looks at risks from employees and third parties. How deep these checks go depends on what specific risks a company has.
The findings from good cyber due diligence can change a deal’s terms. It might affect the price or contract terms. It’s crucial to include data privacy in these checks. This ensures the deal’s value is not lessened by legal problems later on.
Role of the CISO in Mergers and Acquisitions
The Chief Information Security Officer (CISO) plays a key role during mergers and acquisitions. They ensure security fits smoothly into the combined company. The CISO must blend digital and physical assets carefully. They need a mix of skill and foresight to merge different security systems and cultures.
Conducting detailed cyber checks is a top job for the CISO. It’s vital when joining two companies. The story of Verizon and Yahoo in 2016 teaches us a lesson. It shows what happens when due diligence lacks: a loss of $350 million due to hidden data breaches.
Beyond just technical tasks, the CISO also brings together different company cultures. A united security strategy is essential for strong protection. A 2022 study by the Office of the Privacy Commissioner of Canada underscores this. It talks about the need for better security measures in mergers.
It’s also important to merge security tech well. The goal is to make operations safe and smooth. Forescout’s research found that 62% see big cybersecurity risks in mergers. It shows the importance of a tightly managed security plan.
The CISO also looks deep into the security setup of the company being acquired. They check how well it can handle and respond to threats. This careful review helps make the merged company stronger against cyber attacks.
The Role of the CISO in Mergers and Acquisitions
The role of a CISO is crucial in mergers and acquisitions. They manage the significant cyber risks. The upcoming whitepaper, “Cyber threats in M&A: Unveiling the hidden dangers, and maximising value,” is eagerly awaited. It will offer new strategies for handling cybersecurity in M&As.
CISOs are tasked with creating a security plan. This plan aligns the security policies of both companies. It also ensures a seamless, unified security system.
A CISO has to blend the different security cultures of merging companies. This is a tricky job. Each company has its own way of dealing with cybersecurity. Merging differing security technologies also poses a big challenge. It requires careful planning to make them compatible within the new system.
Carrying out cyber due diligence is key for a CISO. It involves looking into the target company’s security setup, how they protect data, their adherence to laws, and how they respond to security incidents. Spotting security weaknesses early on is vital. This helps avoid future problems for the combined company. Being proactive at this stage is crucial for building a strong, unified security setup.
The CISO needs to get involved early in the M&A process. By understanding the goals and the risks, the CISO can plan the security measures needed for a smooth merger. This early security planning helps protect the new entity’s interests. It also lays a solid groundwork for adding future security measures.
M&A Cybersecurity UK: Key Strategies
Strategic planning is key in M&A for cybersecurity to protect the deal’s value. Data breaches, like the Marriott-Starwood incident affecting 339 million guests, show the risks. Thus, it’s vital to include comprehensive cybersecurity strategies early on.
EY stresses on cybersecurity due diligence. This step finds hidden risks before closing deals. It examines the target company’s system to spot and fix vulnerabilities. These actions help maintain the deal’s value. For example, after buying a company, it’s important to keep an eye on systems. This includes fixing vulnerabilities and having strong plans for incidents.
Companies face big cyber attacks, making risk assessment crucial. This helps guess costs for fixing and preventing future issues. It aids better M&A talks. More people are now focusing on cybersecurity checks. Services like Mitigate Cyber and IASME Consortium are in demand because of this.
It’s important to check if current cyber risk controls work well. They must match the UK’s National Cyber Strategy and meet the deal’s needs. Not protecting data can lead to huge fines. Thus, strategic planning is essential.
Putting these strategies into action can lower risks and strengthen defense against cyber threats. Looking ahead and planning carefully helps keep assets safe. This protects the deal value in the end.
Assessing Hidden Security Threats
When companies join during mergers, finding hidden security threats is a big challenge. These threats might be unknown weaknesses or ongoing cyberattacks. They can cause major problems in the future. Different company cultures can make these risks even worse, as each company has its own way of handling cybersecurity.
To handle these hidden risks, it’s crucial to do a detailed cyber check. This means looking closely at the other company’s security, how they protect data, and how they follow rules. It’s key to find and deal with any cyberattacks early. This prevents loss of money, business problems, and damage to reputation.
Merging tech safely needs careful planning and constant watchfulness. It’s like putting together a detailed jigsaw puzzle. Every piece must fit just right to keep the company safe. Doing a thorough cyber check helps spot dangers and use this info in talks. Taking steps to improve security helps avoid bigger issues later, keeping the merger valuable.
Creating a Unified Security Culture
Merging companies face a tough task: aligning different security cultures. Each company has its own cyber security mindset. Bridging these differences is not just about matching documents. It’s about creating a security system that works better for everyone.
Finding hidden security threats early is key. Acquired companies might have unseen vulnerabilities. Addressing these risks is essential. It prevents serious problems. This is why thorough checks are critical for cyber security success. They assess the security setup and how the company responds to incidents.
Mixing different technologies is a big obstacle. Companies use various cyber security platforms. Making these systems work together is crucial. It helps create a secure working environment and reduces risks.
Building a shared security culture is about more than technology. Getting the Chief Information Security Officer (CISO) involved early is vital. Working with other teams is important too. It helps form a strong, united security approach. The goal is to blend the best parts of each company’s security culture. This creates a strong, unified cyber security identity for the new company.
Managing Technology Compatibility
In mergers, technology compatibility is a big hurdle. Organisations use different cybersecurity platforms. So, making them work together is key for a successful merger. One main challenge is to ensure various security technologies can merge without harming the overall security.
According to “Cybersecurity Considerations in UK M&A,” blending different organisational cultures complicates things. Each has its own way of seeing and handling cybersecurity. It’s vital to check thoroughly for hidden security threats that could cause financial or reputational damage.
Merging firms often rely on different cybersecurity systems. It’s crucial to either find new solutions or create hybrid ones to unify the infrastructure. This protects the merged entity while keeping systems running smoothly. Making security policies work together strategically is also important. It helps create a single security framework that combines technical measures with a shared culture of security among employees.
UK businesses face many IT hurdles in mergers, like making sure systems work well together. This needs careful planning and IT know-how. It’s also important to closely check for cybersecurity weaknesses. Setting strong data management rules helps avoid risks like data loss.
It’s just as important to match IT cultures as it is to merge IT systems for a smooth integration. You need a detailed plan that looks at IT governance, how to stay compliant, and manage risks. A cybersecurity check-up is key in mergers to find weak spots and set up a strong risk management plan. Spending on security improvements, solid IT policies, and training staff boosts cybersecurity and helps mergers succeed. Handling IT risks well is crucial for a smooth merge and stronger cyber safety.
Cybersecurity Post-M&A Integration
Handling cybersecurity after merging companies is crucial for their success. A detailed security check should continue after the merger. It finds and solves new security issues, protecting the company’s digital and physical things.
A key step is to align security policies of both companies. This mix aims to create a single, strong security culture. It keeps important data safe, private, and available.
Combining security technologies from both companies is a big hurdle. This often means buying new technologies or updating and removing old ones. The goal is to have a unified, secure computer system.
It helps a lot when the Chief Information Security Officer (CISO) gets involved early in the merger. They provide valuable insight that aligns with the company’s goals. This ensures security risks are identified and fixed early on.
Mergers can bring hidden security problems or even active threats. These issues could harm the company financially and hurt its reputation. Continuous security checks and updates after the merger help avoid these risks. Focusing here helps the new company transition smoothly while keeping its data secure.
Regulatory Compliance and Data Protection
UK M&As must ensure cybersecurity compliance and strong data protection. The UK GDPR is key in protecting deal security and avoiding big penalties. Breaking GDPR rules could mean fines up to 4% of yearly global revenues from the last year. This shows how financial risks are a big deal.
Since May 2018, GDPR has led to over 1,878 fines, totaling more than EUR 4.4 billion. These figures show the importance of checking data protection when merging or acquiring companies. Doing this protects against fines and helps keep compliance afterwards.
Spotting red flags like outdated privacy policies is crucial. Companies should also conduct cybersecurity checks and look into AI uses. Reviewing past security problems is important for keeping data safe. Also, don’t forget about California’s Privacy Laws which have their own penalties.
Sector-specific laws like HIPAA add more complexity. Firms need to have solid cybersecurity practices and regular checks to stay compliant. These actions lower risk and help maintain trust and value in the market.
New laws like the Data Protection and Digital Information Bill are coming in spring 2024. They aim to make data law compliance easier. Along with the EU AI Act’s tough rules, companies must stay aligned with changing data protection standards during M&As.
Conclusion
Cybersecurity is key in UK mergers and acquisitions. It ensures companies stay strong and keep their value safe. The new whitepaper, “Cyber threats in M&A: Unveiling the hidden dangers, and maximising value”, highlights risks. These can affect money, how things work, and reputation. It’s crucial that when two companies join, they blend their security rules well.
When companies merge, looking closely at the other company’s security is a must. This helps find weak spots and sets the stage for better security after joining. Challenges like making different technologies work together are big. UK firms often struggle here during mergers. Having the top security boss involved early helps identify risks. This makes it easier to manage security during the merger.
To merge companies safely, a clear cybersecurity plan is needed. This plan should focus on risk, data safety, and legal rules. Following GDPR laws is part of this, avoiding legal or money problems. A strong cybersecurity presence boosts the company’s image during and after the merger. It builds trust and keeps the company stable. Being ready for security threats makes sure the company and its assets stay safe. This leads to a more successful merger or acquisition.
