The opportunity to acquire or merge with another company offers many benefits in the forms of new lines of business, expanded customer bases, and potential for increased profits. However, merging with another organization can also expose a company to a host of new risks that need to be understood prior to completing the deal. Companies can be accepting much more risk than they originally anticipate, as while they typically perform thorough due diligence in other areas, in our experience, they often fail to fully address security issues. Companies going through the M&A process must understand these risks before signing off on the agreement.
A SecureState client has uniquely been on both ends of this problem. A few years ago, they were acquired by a larger company that wanted to know what levels of risk they were taking on by purchasing our client. Later, SecureState’s client was now working as a division of the larger company, and was looking to acquire a third company. What they did not understand were the levels of risk present in the organization being acquired, and the best ways to reduce that risk to acceptable levels.
M&A Due Diligence Assessment:
Examining the security in place at a potential purchase allows for a more informed decision and to fully understand the potential impacts of a purchase to an organization. While security may not be the reason for purchasing a company, it can often drastically affect the potential value of a company. If a purchased company eventually ends up costing more than an organization can profit due to a security breach or missing compliance, an investment could end up negatively impacting profits.