4 Critical Security Requirements for Your Next M&A Transaction

When you’re involved in an acquisition or merger, cybersecurity needs to be your top priority. One mistake with cybersecurity can tank your entire deal. Unfortunately, data breaches are not only common, but incidents have been rising for decades with no sign of slowing down.

4 Critical Security Requirements for Your Next MA Transaction

Cyber threats are a growing problem for M&A transactions. According to a Forescout survey, 53% of business decision-makers said they experienced a “critical cybersecurity issue or incident” during an M&A transaction that jeopardized the deal. M&A deals are a target because it’s the perfect opportunity to steal a large amount of data belonging to multiple companies.

Chances are, you’ll be passing plenty of documents and files over the internet, including documents that contain private and financial data. If any of your file transfers are unprotected, hackers could end up with your sensitive data.

Implementing these 4 security requirements will help you avoid a preventable security breach and protect your M&A transaction.

  1. Secure online content distribution

    Secure transfers online are imperative to prevent hackers from stealing your data. The safest way to transfer data is through physical external hard drives that you mail. However, that isn’t always a workable solution for every batch of data. Sometimes you need to send contracts and NDAs back and forth in a short period of time and it doesn’t make sense to wait for the mail.

    Protect sensitive files with digital rights management

    Use digital rights management (DRM) software to protect your most sensitive documents like NDAs and any other documents that include personal information, trade secrets, or proprietary information.

    DRM software provides far more protection than a simple password-protected PDF file. DRM software controls what users can do with your files. For example, you can allow users to view, but not edit a document. You can rescind a user’s access to a document from the source at any time. You can also prevent right clicking and disable the copy function to prevent a document’s content from being copied and pasted somewhere unsecure (like in a plain text email).

    The people you do business with may not have bad intentions, but they might have bad habits. Copying and pasting information into an email draft for easy reference later is one of those bad habits. By employing DRM software, you’ll eliminate a handful of preventable problems in one shot.

  2. Use end-to-end encryption for all data transfers and storage

    Encryption is only effective when it’s end-to-end. It’s not enough to encrypt data at rest on your server because when that data is in transit, it’s wide open for interception.

    End-to-end encryption ensures that data is encrypted at rest and in transit. No matter where the data travels, it’s unreadable to anyone without a key. The trick is making sure the software you use to encrypt your data keeps the decryption key secure. If hackers get your decryption key, they can access all your data.

    Hackers also use brute force or side-channel attacks when attempting to break your cipher and bypass the need for a decryption key. It’s critical to choose a reputable, reliable encryption service to prevent these attacks from succeeding.

  3. Investigate the company you plan to acquire

    You will become immediately responsible for any company you acquire. It’s critical to look into all the potential security concerns before signing a deal. You don’t want to take risks with huge consequences. Even large corporations are smart enough to walk away from profitable, high-risk deals.

    For example, in 2016, when Facebook was thinking about acquiring TikTok, the company ran into a couple of security problems. The first concern was that TikTok was based in China. The second concern was that most users were under 18, which would be an automatic breach of child privacy laws in America.

    Although TikTok was acquired by another company and is hugely popular, the cybersecurity threats still exist. In fact, ByteDance the company that bought TikTok came under investigation in 2019 after TikTok employees reported they were required to censor certain political videos. ByteDance has since been sued in a class-action lawsuit over data privacy violations.

  4. Make sure the other company’s software isn’t full of backdoors

    Backdoors are one of the worst cybersecurity threats you’ll encounter. A backdoor is essentially a hole left in a software program that allows the creator to access the software while bypassing any and all security and verification methods.

    This issue can catch you by surprise later down the road. Hire a professional to inspect all software to ensure there are no backdoors.

    Cybersecurity threats grow more complex every day

    Don’t take your eye off the ball. Cybersecurity threats are rising in frequency and complexity. Make sure to do your due diligence before completing any deal.

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Online Threat Alerts Security Tips

Pay the safest way

Credit cards are the safest way to pay for online purchases because you can dispute the charges if you never get the goods or services or if the offer was misrepresented. Federal law limits your liability to $50 if someone makes unauthorized charges to your account, and most credit card issuers will remove them completely if you report the problem promptly.

Guard your personal information

In any transaction you conduct, make sure to check with your state or local consumer protection agency and the Better Business Bureau (BBB) to see if the seller, charity, company, or organization is credible. Be especially wary if the entity is unfamiliar to you. Always call the number found on a website’s contact information to make sure the number legitimately belongs to the entity you are dealing with.

Be careful of the information you share

Never give out your codes, passwords or personal information, unless you are sure of who you're dealing with

Know who you’re dealing with

Crooks pretending to be from companies you do business with may call or send an email, claiming they need to verify your personal information. Don’t provide your credit card or bank account number unless you are actually paying for something and know who you are sending payment to. Your social security number should not be necessary unless you are applying for credit. Be especially suspicious if someone claiming to be from a company with whom you have an account asks for information that the business already has.

Check your accounts

Regularly check your account transactions and report any suspicious or unauthorised transactions.

Don’t believe promises of easy money

If someone claims that you can earn money with little or no work, get a loan or credit card even if you have bad credit, or make money on an investment with little or no risk, it’s probably a scam. Oftentimes, offers that seem too good to be true, actually are too good to be true.

Do not open email from people you don’t know

If you are unsure whether an email you received is legitimate, try contacting the sender directly via other means. Do not click on any links in an email unless you are sure it is safe.

Think before you click

If an email or text message looks suspicious, don’t open any attachments or click on the links.

Verify urgent requests or unsolicited emails, messages or phone calls before you respond

If you receive a message or a phone call asking for immediate action and don't know the sender, it could be a phishing message.

Be careful with links and new website addresses

Malicious website addresses may appear almost identical to legitimate sites. Scammers often use a slight variation in spelling or logo to lure you. Malicious links can also come from friends whose email has unknowingly been compromised, so be careful.

Secure your personal information

Before providing any personal information, such as your date of birth, Social Security number, account numbers, and passwords, be sure the website is secure.

Stay informed on the latest cyber threats

Keep yourself up to date on current scams by visiting this website daily.

Use Strong Passwords

Strong passwords are critical to online security.

Keep your software up to date and maintain preventative software programs

Keep all of your software applications up to date on your computers and mobile devices. Install software that provides antivirus, firewall, and email filter services.

Update the operating systems on your electronic devices

Make sure your operating systems (OSs) and applications are up to date on all of your electronic devices. Older and unpatched versions of OSs and software are the target of many hacks. Read the CISA security tip on Understanding Patches and Software Updates for more information.

What if You Got Scammed?

Stop Contact With The Scammer

Hang up the phone. Do not reply to emails, messages, or letters that the scammer sends. Do not make any more payments to the scammer. Beware of additional scammers who may contact you claiming they can help you get your lost money back.

Secure Your Finances

  • Report potentially compromised bank account, credit or debit card information to your financial institution(s) immediately. They may be able to cancel or reverse fraudulent transactions.
  • Notify the three major credit bureaus. They can add a fraud alert to warn potential credit grantors that you may be a victim of identity theft. You may also want to consider placing a free security freeze on your credit report. Doing so prevents lenders and others from accessing your credit report entirely, which will prevent them from extending credit:

Check Your Computer

If your computer was accessed or otherwise affected by a scam, check to make sure that your anti-virus is up-to-date and running and that your system is free of malware and keylogging software. You may also need to seek the help of a computer repair company. Consider utilizing the Better Business Bureau’s website to find a reputable company.

Change Your Account Passwords

Update your bank, credit card, social media, and email account passwords to try to limit further unauthorized access. Make sure to choose strong passwords when changing account passwords.

Report The Scam

Reporting helps protect others. While agencies can’t always track down perpetrators of crimes against scammers, they can utilize the information gathered to record patterns of abuse which may lead to action being taken against a company or industry.

Report your issue to the following agencies based on the nature of the scam:

  • Local Law Enforcement: Consumers are encouraged to report scams to their local police department or sheriff’s office, especially if you lost money or property or had your identity compromised.
  • Federal Trade Commission: Contact the Federal Trade Commission (FTC) at 1-877-FTC-HELP (1-877-382-4357) or use the Online Complaint Assistant to report various types of fraud, including counterfeit checks, lottery or sweepstakes scams, and more.
  • Identitytheft.gov: If someone is using your personal information, like your Social Security, credit card, or bank account number, to open new accounts, make purchases, or get a tax refund, report it at www.identitytheft.gov. This federal government site will also help you create your Identity Theft Report and a personal recovery plan based on your situation. Questions can be directed to 877-ID THEFT.

How To Recognize a Phishing Scam

Scammers use email or text messages to try to steal your passwords, account numbers, or Social Security numbers. If they get that information, they could get access to your email, bank, or other accounts. Or they could sell your information to other scammers. Scammers launch thousands of phishing attacks like these every day — and they’re often successful.

Scammers often update their tactics to keep up with the latest news or trends, but here are some common tactics used in phishing emails or text messages:

Phishing emails and text messages often tell a story to trick you into clicking on a link or opening an attachment. You might get an unexpected email or text message that looks like it’s from a company you know or trust, like a bank or a credit card or utility company. Or maybe it’s from an online payment website or app. The message could be from a scammer, who might

  • say they’ve noticed some suspicious activity or log-in attempts — they haven’t
  • claim there’s a problem with your account or your payment information — there isn’t
  • say you need to confirm some personal or financial information — you don’t
  • include an invoice you don’t recognize — it’s fake
  • want you to click on a link to make a payment — but the link has malware
  • say you’re eligible to register for a government refund — it’s a scam
  • offer a coupon for free stuff — it’s not real

About Online Threat Alerts (OTA)

Online Threat Alerts or OTA is an anti-cybercrime community that started in 2012. OTA alerts the public to cyber crimes and other web threats.

By alerting the public, we have prevented a lot of online users from getting scammed or becoming victims of cybercrimes.

With the ever-increasing number of people going online, it important to have a community like OTA that continuously alerts or protects those same people from cyber-criminals, scammers and hackers, who are every day finding new ways of carrying out their malicious activities.

Online users can help by reporting suspicious or malicious messages or websites to OTA. And, if they want to determine if a message or website is a threat or scam, they can use OTA's search engine to search for the website or parts of the message for information.

Help maintain Online Threat Alerts (OTA).

4 Critical Security Requirements for Your Next M&A Transaction