3 Cyber Security Fundamentals Often Overlooked During M&As
Businesses have made cyber security an integral part of their M&A processes – so why are so many issues going unnoticed? Consider one study in which the vast majority (80%) of businesses agreed cyber security had become a critical part of M&A due diligence 1. However, in that same survey, more than one-third of businesses admitted to failing to spot a cyber security problem at a company they acquired until after the ink had dried on the deal.
Perhaps these figures can provide some insight into the results of a separate study, this one conducted by Accenture Strategy. After investigating the 500 largest acquisitions by publicly traded companies over the course of a decade, Accenture found 45% of those deals were struggling to create value two years out 2. When taken together, these two studies indicate a disconnect between what businesses value in terms of cyber security and how they are executing on those values.
No two companies are identical and this includes their approach to IT and IT security. Preventing potentially costly M&A cyber security gaps requires focusing on three specific areas. They are:
- How IT manages data. Data has become one of a business’s most valuable assets, perhaps second only to its people. Prior to beginning the M&A process, businesses must be clear on each other’s data management process. This includes big-ticket concerns like how they store data, how they back it up, and the security regulations that govern each. Also, it covers comparatively smaller worries such as whether or not they using SharePoint, do they have versioning turned on in it, etc. All of these points need to be hammered out to keep an M&A on track.
- How IT manages people. M&A engagements can be a breeding ground for Shadow IT. If recently acquired end users don’t like a new system, they may very well look into finding one they do like. Time must be spent working with end users to understand how they do their jobs and how to minimize disruption resulting from the M&A. In addition, take care to blend, adapt, and publicize policies to keep workers from unknowingly exposing the company.
- How IT manages the way people work. It’s been said that every company has become a technology company. So, before beginning an M&A process, IT will need to take a look at the technologies the other side uses to power every facet of their business, beyond just the security component. This can help identify conflicts, gaps, and duplication of efforts, allowing for a more secure and efficient transition.
Next Steps: Keeping cyber security on the forefront during M&As
M&As are a great opportunity for businesses, but, as evidenced above, they can also open the door to significant risk. As such, businesses must mitigate that risk wherever possible, including by working with a partner who knows where trouble resides. Arraya has distilled our years of experience in this area into an award-winning M&A methodology. Through this innovative approach, our experts can simplify these complex engagements, bringing them to a successful conclusion.
Want to learn more about how Arraya’s M&A methodology can benefit your business? If so, visit: https://www.arrayasolutions.com/contact-us/ to start a dialogue with us. You can also check out our new eBook: Arraya’s Guide to Running (and Finishing) the M&A Marathon. Arraya can be found on LinkedIn, Twitter, and Facebook. Once you’ve let us know what you think, follow us to stay updated on our industry insights and learning opportunities.
1 Mergers create greater security risk, CSO Online
2 Sizing Up M&A Value Now, Accenture Strategy