Cybersecurity Concerns For Buyers And Sellers In M&A Transactions
Cybersecurity concerns for buyers and sellers in M&A transactions have stepped into the forefront. That’s because technology is an indispensable part of business operations in today’s world. Companies must rely on tech capabilities to remain competitive and offer top-notch products and services to their customers.
Cybersecurity concerns for buyers and sellers in M&A transactions have stepped into the forefront. That’s because technology is an indispensable part of business operations in today’s world. Companies must rely on tech capabilities to remain competitive and offer top-notch products and services to their customers.
However, integrating technology and compiling huge amounts of data also means a higher risk of cyber attacks and vulnerabilities. Before entering into M&A transactions, dealmakers need assurance that the target has the necessary security protocols to stay protected.
Cyber attacks and hacking incidents cost organizations millions of dollars each year, with increasing risks year after year. As businesses move their operations to the cloud to enhance efficiency, speed, and their customer base, they invite more risks.
Further, to continue to operate efficiently, businesses must compile, use, and transfer personal data. This data may come from vendors, suppliers, customers, employees, and other stakeholders. The possibility of Personally Identifiable Information (PII) leaks raises the risks of fines and penalties for regulatory non-compliance.
Worldwide laws and regulations require organizations to secure the PII entrusted to them. Any leaks can incur serious crackdowns that companies want to avoid at all costs. While hacking incidents are a real threat, the human error factor is another risk that companies must account for.
For this reason, cybersecurity concerns for buyers and sellers in M&A transactions are valid. Advisors and dealmakers must address them at every step of the process and secure the companies and the transaction.
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Cybersecurity Concerns for Buyers and Sellers in M&A Transactions
Cybersecurity has become such a crucial concern that if the due diligence raises any red flags, the deal could fall through. Technology is the key driver in close to 14.5% of global M&A, accounting for 86.4B worth of deals. However, 53% of them are jeopardized because of cybersecurity concerns.
The discovery of cyber threats in the target company can also lead to its valuation dropping in a big way. A great example is Verizon’s acquisition of Yahoo! For $4.8B. Cybersecurity concerns resulted in Verizon lowering the price by $350M. Yahoo! ended up paying $35M in penalties and $80M to settle actions by shareholders.
Cybersecurity Concerns in M&A Deals – The Buyer Perspective
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