The prevalence of data breaches and their growing financial impacts make cybersecurity an important factor for any business. But it’s especially important for companies involved in or planning for an acquisition, merger, or initial public offering (IPO).
The added element of COVID-19 has made cybersecurity due diligence even more imperative. In today’s world of aggressive cybercrime, organizations of all sizes need to get smart, structured, and started with cybersecurity due diligence before transaction talks begin. Doing so could help:
Learn how the due diligence process can help your company reduce risk, build a culture of security, and approach a transaction with confidence.
Security incidents and data breaches can hurt an organization in many ways, including:
To help mitigate or prevent these costs, organizations need to proactively approach their transaction preparation process and ask important questions about their cybercontrols. These questions include:
Since the outbreak of the COVID-19 pandemic, the number of data breaches has drastically increased. Attackers have focused their efforts on exploiting personnel working from home or targeted systems due to reduced IT and security personnel monitoring their systems.
These breaches and security incidents increase the cyber-risk profile of a potential merger and acquisition (M&A) target.
The figures below show the following cybercrime trends since COVID-19 began:
Learn more about how to improve your cybersecurity strategy and steps you can take to protect your remote workforce.
Often what’s being sought during an acquisition is a company’s data. Companies don’t just buy companies, they buy value—and the assets valued in an acquisition are the same ones that make it attractive to a hacker.
A cybersecurity-aware company knows where critical assets reside and how safely they’re protected. This is achieved through implementing and consistently monitoring:
The complexity of today’s business operations makes it harder than ever to keep data secure. The availability of cloud technologies means critically important information may be stored offsite, while companies that outsource key functions may inadvertently give vendors access to data with inadequate security controls.
Additionally, the ease with which cloud services can be utilized lets anyone send sensitive information outside an organization without its IT department knowing. Learn more about how to protect your organization from the unique cyberthreats posed by COVID-19.
In the COVID-19 environment, companies anticipating a due-diligence review—as either a buyer or a seller—have a lot to sort through. Here are three areas to focus on to bolster your cybersecurity plan.
Addressing cybersecurity exposure and risk prior to the due-diligence process gives companies a better chance to do the following:
Reviewing cyber-risks early also provides companies with a longer time to remediate vulnerabilities and mitigate risk.
An ongoing cybersecurity program—even when a deal isn’t on the table—may make a company more attractive once it’s ready to sell. It can indicate a commitment to security controls and data governance—two qualities highly valued by buyers.
At a minimum, a cybersecurity due-diligence review will provide a thorough investigation of the following:
In addition, companies could benefit from looking closely at these key areas:
Learn more about key actions to take during due diligence and others steps to take to lay the groundwork for a smoother M&A transition during COVID-19.
A strong cybersecurity culture starts at the top of an organization—with the board of directors and executive management. According to European Union Agency for Network and Information Security’s Cybersecurity Culture in Organizations report, a cybersecurity culture is the “knowledge, beliefs, attitudes, norms, and values of people regarding cybersecurity and how these manifest in interacting with information technologies.”
When individuals know the risks, protocols, and required actions, awareness increases and technical controls become more effective. Companies can greatly benefit from building, maintaining, and testing a strong security-awareness training program.
It’s important for executive management to participate and promote awareness trainings. All employees, contractors, and vendors should also be involved to help verify cybersecurity is top of mind for everyone with access to systems and data.
For more information about strengthening your company’s cybersecurity efforts, please see our Cybersecurity Guide and contact you Moss Adams professional.