Cybersecurity due diligence for business consolidation
Mergers and acquisitions (M&A) and divestitures are complex processes that require careful planning and execution. Cybersecurity is a critical (yet often overlooked) aspect of these transactions. Ensuring a secure and seamless integration of systems and practices is crucial to the deal’s success and the combined organization’s ongoing security.
Here we’ll discuss the importance of cybersecurity due diligence during M&A and divestitures, offer a few remedies and solutions to potential problems and pitfalls, and suggest best practices and practical solutions, including adopting zero trust best practices and lateral movement protection.
Cybersecurity auditing considerations
Consideration of mutual cybersecurity activities and systems is vital to the success of M&A and divestitures. It involves assessing the target company’s cybersecurity posture, identifying potential risks and vulnerabilities, and developing a plan to address them. Key components of cybersecurity due diligence include:
- Assessing the target company’s security policies, procedures, and controls
- Evaluating the maturity of the target company’s security program
- Identifying potential security risks and vulnerabilities
- Evaluating the target company’s compliance with relevant laws, regulations, and industry standards
A thorough cybersecurity due diligence process can help prevent costly security incidents, protect sensitive data, and ensure a smooth transition during M&A and divestitures.
Remedies and solutions to potential cybersecurity pitfalls
M&A and divestitures can introduce a wide range of cybersecurity risks and challenges. Some potential problems and pitfalls include:
- Integration of incompatible security systems and technologies
- Inadequate protection of sensitive data
- Unresolved security vulnerabilities in the target company’s infrastructure
- Non-compliance with regulatory requirements
To address these challenges, organizations should consider the following remedies and solutions:
- Develop a comprehensive integration plan that includes cybersecurity considerations
- Conduct a thorough risk assessment to identify and prioritize potential security risks
- Implement security controls and technologies to protect sensitive data and systems
- Establish ongoing monitoring and reporting to ensure compliance with relevant laws and regulations
Cybersecurity best practices and practical solutions
To ensure a secure and seamless integration of systems and practices during M&A and divestitures, organizations should consider the following best practices and practical solutions:
- Implementing Zero Trust Best Practices:
Adopt a zero trust framework to ensure a robust security posture during the integration process. Key components of a zero trust framework include identity and access management, microsegmentation, and continuous monitoring. Refer to Forrester’s Zero Trust eXtended (ZTX) Framework for a comprehensive guide.
- Lateral Movement Protection:
Protect against lateral movement by implementing network segmentation, threat hunting, anomaly detection, and a review of all service accounts/non-person entity (NPE) accounts. These strategies can help limit the potential impact of a security breach during the integration process.
- Conduct Regular Security Assessments:
Schedule periodic security assessments to identify and address potential vulnerabilities in the combined organization’s infrastructure.
- Establish a Joint Security Team:
Create a joint security team comprising members from both organizations to oversee the integration process, ensure security best practices are followed, and address potential security issues.
Real-World Example: Secure M&A Integration in the Healthcare Industry
A large healthcare organization acquired a smaller competitor, raising concerns about the integration of the two companies cybersecurity infrastructures. By conducting thorough cybersecurity due diligence and implementing zero trust best practices and lateral movement protection, the organizations successfully merged their systems while maintaining a strong security posture. Key steps in this process included:
- Assessing the target company’s security policies, procedures, and controls to identify potential risks and vulnerabilities.
- Implementing a zero trust framework to ensure robust security during the integration process, including identity and access management, microsegmentation, and continuous monitoring.
- Establishing lateral movement protection strategies, such as segmentation, threat hunting, and anomaly detection, to prevent potential security breaches from spreading across the combined organization.
- Creating a joint security team to oversee the integration process and ensure adherence to security best practices.
Cybersecurity due diligence is a vital component of the M&A and divestiture process. By conducting thorough assessments of the target company’s security posture, identifying potential risks and vulnerabilities, and implementing best practices such as zero trust and lateral movement protection, organizations can ensure a secure and seamless integration of systems and practices. As organizations navigate the complexities of M&A and divestitures, it is essential to prioritize cybersecurity and address potential problems and pitfalls head-on. By adopting the best practices and practical solutions outlined in this article, companies can protect their cybersecurity infrastructure, safeguard sensitive data, and ensure the long-term success of their transactions.
Further reading and resources:
Zero Trust eXtended (ZTX) Framework – Forrester
Navigating Cybersecurity Due Diligence in M&A Transactions – PwC
Cybersecurity in Mergers & Acquisitions: Due Diligence and Integration – National Law Review
A Guide to Cybersecurity Due Diligence in M&A Transactions – Lexology
In summary, protecting your cybersecurity infrastructure during mergers, acquisitions, and divestitures is crucial for the ongoing security and success of the combined organization. By conducting cybersecurity due diligence, addressing potential problems and pitfalls, and implementing best practices like zero trust and lateral movement protection, you can ensure a smooth and secure transition for all parties involved.