4 Critical Security Requirements for Your Next M&A Transaction

4 Critical Security Requirements for Your Next MA 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.

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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4 Critical Security Requirements for Your Next M&A Transaction