Assessing security risks with mergers and acquisitions

Assessing security risks with mergers and acquisitions

When Texas business owners are interested in merging with or acquiring another business, it is important that they conduct a thorough analysis of the other company. As can be seen with high profile transactions such as the Yahoo acquisition, an important issue must be the security of each company’s computer systems. While security is never perfect, understanding where the risks may lie can help to minimize them.

Both business risks and IT risks need to be analyzed. An eye should be kept towards preventing information loss, including credit card data, intellectual property secrets and customer information.

Due diligence is vital. Companies should ask what type of security program the target business has in place. This should include questions about how it is operated and whether it is a real program. Security programs that have no leader and that have no updated policies are riskier. It is also important to understand the company’s rate of attrition to evaluate how that may be impacted once employees learn of the impending deal. When companies merge, their security risks are combined, making them easier targets for criminals or disgruntled employees. The strategies will need to be updated to address the combined risks.

Mergers and acquisitions can bring significant growth. If due diligence is not employed, however, there may be many pitfalls once the deal is completed. Accordingly, a careful evaluation should be undertaken before a company proceeds with such a transaction. Moving too quickly or taking shortcuts on the analysis phase can expose the company to significant risks. Business owners who are contemplating a merger or acquisition may want to consult with an attorney who may be able to analyze data from the target company to help the client identify problematic areas within its security protocols.

2017-06-07T17:50:03+00:00 March 25th, 2017|Business Law|

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