During the COVID-19 pandemic, many companies decided to merge with or buy other companies to become stronger and grow their businesses. This means combining different systems, ways of working, and cultures of the companies. One important but often overlooked part of this process is cyber-security.
When companies combine, they not only gain new things but also take on the cyber-security problems of the companies they join. We’ll talk about the importance of cyber-security in mergers and acquisitions, the challenges involved, good practices to follow, and the changing role of Chief Information Security Officers in managing these risks.
Understanding the Cybersecurity Risks in M&A
One of the major problems when a company pay for another is the fear of getting their security problems too. When a company buys another, it doesn’t means just get new stuff—it also gets the other company’s security problems. These problems could be weak spots, old systems, or bad security habits that could make the buying company vulnerable to cyber-attacks.
A good model of this happened when Verizon bought Yahoo in 2017. They found out that Yahoo had a secret problem where hackers had taken the personal information of over 3 billion people. This made the deal cost less and also caused a lot of financial and reputation damage to Verizon.
The Complexity of Integration
Combining different computer systems and security rules after a company buyout is a major problem. Big companies often have complicated and unique computer setups, and combining these with the systems of the bought company can be a long and difficult process. This joining can take two to four years, and during this time, the company is still at risk of cyber-attacks.
It’s even more difficult when the company you pay for is in a different place with different rules about keeping data safe. It’s also hard if their computers are old or don’t work well with your company’s computers. For example, if a big bank buys a small bank, the small bank might not have very good ways to keep data safe. This could make it more likely for hackers to get information during the process of joining the two banks together.
An Expanded Attack Surface
Acquiring another company can make it easier for hackers to attack your company. When two companies join forces, they connect their computer systems, which can create more ways for hackers to get in. Also, new employees from the acquired company may not be as familiar with your security rules, making it easier for hackers to trick them.
Hackers often target companies that are going through mergers or acquisitions. They know that these companies might be busy with the process and not as focused on security. One company said that they saw a 400% increase in hacking attempts after announcing a merger. This shows how important it is to keep strong security measures in place throughout the entire process.
Best Practices for Cybersecurity in M&A
Pre-Acquisition Due Diligence
Before paying for a company, it’s important to examine how safe their computer systems are. This means looking at their security measures, finding any issues, and understanding the risks they might bring to the bigger company. You should also examine if they follow the right rules and have a plan to deal with cyber-attacks. By knowing these risks, you can decide if the deal is a good idea and how to keep your company safe.
Developing a Post-Acquisition Integration Strategy
Once the companies join together, the focus turns to combining their computer systems and security measures. This should follow a clear plan that puts cyber-security first.
A good way to do this is to start with the most prime systems and gradually add the less important ones. This helps to control the process and less the risk of problems. Using special tools that can see both companies’ networks can also help find and fix potential threats.
A lot of companies and their cyber-security leaders are now putting in place programs to be more involved in acquisitions and move faster than before. This is because there are many examples of newly acquired companies being hacked, which then becomes a problem for the parent company.
Continuous Monitoring and Risk Assessment
Cybersecurity is important even after mergers and acquisitions. Companies need to keep watching for threats and update their security measures. It’s important to find and fix problems quickly, especially right after a merger. Using a tool like Relia-Quest can help keep the company safe during this process. Carl Lee from APi Group says it’s important to be flexible and quick when it comes to security, and a vendor-agnostic solution like Relia-Quest makes it easier to do this.
The Evolving Role of CISOs in M&A
Early Involvement is Key
In M&A deals, cyber-security is crucial. The CISO should be involved early on to assess risks and protect data. After the deal, the CISO helps integrate IT systems and ensures everyone is trained in cyber-security.
Building a Cybersecurity Framework for M&A
To protect against cyber threats during mergers and acquisitions, cybersecurity leaders should create a plan that covers everything from checking companies before buying them to keeping an eye on things after the deal is done. This plan should help everyone involved, including the CEO, CFO, and legal team, work together to make sure cybersecurity is a big part of the whole process. By doing this, they can reduce the risk of cyberattacks and other problems.
