Cyber Security Assessments for Mergers and Acquisitions
Cyber Security Assessment or more formally "Cyber Risk Assessments" have recently become a critical tool in any M&A activity. According to Forbes, more than a third (40%) of acquiring companies engaged in a merger and acquisition transaction said they discovered a cybersecurity problem during the post-acquisition integration of the acquired company.
We all remeber Verizon’s discovery of a prior data breach at Yahoo! after having executed an acquisition agreement to acquire the company.
This discovery resulted in a $350 million reduction in the purchase price paid by Verizon, and almost scuttled the deal with Yahoo! They were required to pay a $35 million penalty to settle securities fraud charges alleged by the U.S. Securities and Exchange Commission (SEC) and an additional $80 million to settle securities lawsuits brought by unhappy shareholders.
In 2019, Cyber Security company Forescout published a comprehensive report entitled "The Role of CyberSecurity in Mergers and Acquisitions Diligence." The global study was based on discussions with 2,779 companies across all Industry Verticals. They spoke to both IT decision makers, as well as Business decision makers in the quest to understand the value of Cyber Risk during an M&A transaction.
Key Findings from the report:
- Cybersecurity issues are prevalent and can put a deal into jeopardy:
Over half of respondents (53%) report their organization has encountered a critical cybersecurity issue or incident during an M&A dealthat put the deal into jeopardy.
- Organizations are placing more focus on a target’s cybersecurity posture than they did previously:
81% of ITDMs and BDMs agree that they are putting more of a focus on a target’s
cybersecurity posture than in the past, highlighting that cyber is a top priority for both IT and business
decision makers.
- An undisclosed data breach is a deal breaker for most companies:
73% of respondents agreed that a company with an undisclosed data breach is an immediate deal breaker in their company’s M&A strategy.
- Decision makers sometimes feel they don’t get enough time to perform a cyber evaluation:
Only 36% of respondents strongly agree that their IT team is given time to review the company’s cybersecurity
standards, processes and protocols before their company acquires another company.
- Internal IT teams may lack the skills to conduct cybersecurity assessments:
Among ITDMs, only 37% strongly agree that their IT team has the skills necessary to conduct a cybersecurity assessment for an
acquisition.
- Organizations allocate third party resources to their cybersecurity assessments:
Nearly all respondents (97%) reported that their organizations spend money on outside contractors for IT audits or cybersecurity
risk assessments.
- Connected devices and human error put organizations at risk:
When asked what makes organizations most at risk during the information and technology process, two answers stood out: human error and
configuration weakness (51%) and connected devices (50%).
- Devices often get overlooked and missed during integration:
Over half (53%) of ITDMs say they find unaccounted for devices after completing the integration of a new acquisition.
- Failure to address cyber risk can lead to major acquisition regrets:
Nearly two-thirds of respondents (65%) said their companies experienced regrets in making an M&A deal due to cybersecurity concerns.
TeamCISO has been conducting Cyber Security Risk Assessments across all business verticals, public and private since 2015, and can help you understand the qualitative and quantitave Cyber Risks involved in your impending M&A activities.
All of our assessments will provide both Executive and Technical reports on any deficiencies found, the relevant risk rating and affected systems of that deficiency, as well as remediation advice and links to corrective measures where possible.
We have prepared three packages to help you with your assessment:
Bronze
- Information Security Program Maturity Assessment
- Infrastructure Security Controls from the Internet
- Infrastructure Security Controls from Internal Access
- Discovered Network Attached Assets List
Silver
- Information Security Program Maturity Assessment
- Infrastructure Security Controls from the Internet
- Corporate Website / Client Portal Security Controls
- Infrastructure Security Controls from Internal Access
- Remote Access / 3rd Party Access Controls (VPN & B2B)
- Asset Management Assessment
Gold
- Information Security Program Maturity Assessment
- Infrastructure Security Controls from the Internet
- Corporate Website / Client Portal Security Controls
- Infrastructure Security Controls from Internal Access
- Cloud Based Services Infrastructure Controls (IaaS,PaaS)
- Cloud Based Services Security Controls (SaaS)
- Industrial Controls Security - IoT/IIoT/SCADA/ICS
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- Remote Access / 3rd Party Access Controls (VPN & B2B)
- Asset Management Assessment
- Breach Readiness Assessment
- Dark Web Assessment
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References:
Forescout: THE ROLE OF CYBERSECURITY IN MERGERS AND ACQUISITIONS DILIGENCE
Forbes: Data Privacy And Cybersecurity Issues In Mergers And Acquisitions
AON: Top Five Cyber Risks in Mergers & Acquisitions
Infosecurity Magazine: Cyber Risks Impact on Mergers and Acquisitions
ISC2: Cybersecurity Assessments in Mergers and Acquisitions The ROI of Sound Cybersecurity Programs
Law.com: Mergers, acquisitions and breaches: How to evaluate cyber risk for a deal
Techcrunch: Develop a serious cybersecurity strategic plan that incorporates CCM