7 cyber risks in mergers and acquisitions

Merging with or acquiring another company is stressful for all parties involved. From planning out new business processes to ensuring legal compliance, M&A deals have the potential to negatively impact a business’s foundations and cyber security posture.

During an M&A transaction, your organisation’s information systems are at their most vulnerable. It is a prime time for malicious actors and threats to appear and damage your business. However, companies aware of the security risks can better prepare themselves for a successful and safe M&A.

Below are the 7 cyber risks M&As pose for organisations:

1) An expanded attack surface

An attack surface refers to the entry points into a business’s network. It covers programs and endpoint devices such as mobile phones, tablets, websites, applications, etc. In other words, any physical device or software that connects people to your organisation’s internal systems is a part of your attack surface.

During an M&A, companies’ networks, hardware, software, and systems integrate to develop a new technological ecosystem. The sudden influx of devices results in more avenues cyber threat actors can take to penetrate your network and steal your sensitive information.

2) Increased risk of human error

Companies with a strong security posture acknowledge the human element of cybercrime and digital security. 95% of cyber-attacks are due to human error, and you and your employees are fully capable of making mistakes that can lead to data breaches and a bruised reputation.

Conflicting cyber security cultures merge during an M&A. This means juxtaposing technologies, data stores with contradictory information, and people with different skills and knowledge levels attempt to create a cohesive unit. There is an increased risk of human error as people work with new systems and unfamiliar devices.

There is a chance that, with stress levels high, you and your staff will unwittingly play into a cybercriminal’s scam, cut corners with weak passwords, speed through essential practices without proper care, or accidentally leak information to the wrong users.

3) Clashing cyber security strategies

A company’s cyber security strategy is a forward-thinking plan that outlines how an organisation will protect and defend its digital assets. It is vital to a business’s IT infrastructure and helps companies swerve around and overcome potential cyber threats while reducing costs.

However, every strategy is unique to its company. During an M&A, conflicting ideals and expectations adds additional pressure to the parties involved. In regards to cyber security, this can result in miscommunication, missed deadlines for IT sourcing and updates, and a lack of coordination.

cyber risk mergers acquisitions

4) More opportunities to fall victim to a cyber-attack

M&A operations are transitionary periods for companies, and moving from older models to newer systems exposes IT networks and their security programs to additional cyber threats.

Common threats businesses must deal with are:

  • Phishing attacks
  • Malware
  • Ransomware
  • Distributed denial-of-service (DDoS) attacks
  • Man-in-the-middle (MITM) attacks

The longer your technology takes to integrate with another’s, the higher the chance cybercriminals can identify and exploit your vulnerabilities. Therefore, when businesses undergo an M&A, it is crucial to keep in mind cyber security best practices and encourage open communication for people to exercise greater caution and prevent security breaches.

5) Inherited digital weaknesses

All businesses follow their own paths, requiring unique security services and IT infrastructures customised for their users. While M&As can be seen as opportunities to improve company processes, upgrade hardware and software, and create a more dynamic business model, the technical side of the process comes with a downside organisations should be aware of.

No matter if your business is merging with another or acquiring an organisation, you inherit the other party’s digital weaknesses. Their IT infrastructure priorities differed from yours – their systems could contain programs that do not match your cyber security requirements or legacy hardware unsuited to the modern market.

6) Lack of cybersecurity due diligence

During an M&A, it is expected that companies conduct thorough assessments of the other’s IT systems and the policies and solutions that go into securing data. These audits aim to help businesses approach upcoming deals cautiously, and air out any grievances companies have before signing a contract.

Overlooking due diligence to close deals faster is a mistake no company should make during an M&A. Depending on the nature of the M&A, organisations can hide their past experiences with cyber threats or choose to downplay the event to make the deal work in their favour.

As a business owner, you must fully understand the other party’s cyber history and rectify any issues that threaten your organisation. Failing to do so can result in reoccurring incidents of malicious actors gaining access to your networks.

7) Network integration problems

Today’s business environments demand faster technologies and more efficient solutions. To keep up with their competition, organisations have continuously adopted and deployed more complex programs and tools to create highly sophisticated IT networks relevant to their users.

During an M&A, IT infrastructures at varying stages of their owner’s business are expected to integrate seamlessly. This is not always the case. Organisations who do not adequately prepare themselves for an M&A increase their risk of encountering integration issues, from incompatible software and hardware to information stored according to different management systems.

Plan for and perform an M&A alongside cyber security specialists

Mergers and acquisitions are major undertakings. They require you to dedicate significant amounts of time, resources, and money to ensure that you make the right moves for your business and employees.

The cyber security services at Atarix support companies before, during, and after an M&A. Whether you need a team of IT experts to continuously monitor your systems for threats or want quality advice on how to securely transition into the next era of your business, talk to the team today – their history with successful M&As speaks for itself