Articles & Blogs
CYBERSECURITY FOR MERGERS & ACQUISITIONS: Ensuring a Secure Transition
Written By Virendra Upadhyay & Mrinal Durani II
The growing concern regarding cyber threats is particularly alarming in today’s digital landscape. In the first quarter of 2023, there was a 7% surge in global cyber-attacks. Concurrently in 2022, 60% of organizations involved in M&A undertakings made cybersecurity posture a prime focus during their due diligence.
The rising wave of M&A undertakings highlights the indisputable significance of cybersecurity measures and a thorough comprehension of cyber-attacks that one can be susceptible to while orchestrating an M&A event.
Why Do Attackers Find M&A Deals So Intriguing?
Attackers seize every opportunity to exploit vulnerabilities and access sensitive data. This predatory conduct finds fertile ground in Mergers and Acquisitions (M&As). With a broader array of actors involved, the likelihood of human error and critical network oversights increases during security assessments. Throughout the journey of an M&A, both the acquiring company and the target entity face vulnerabilities, often intensified by the participation of third-party vendors in attacks aimed at financial institutions, legal entities, supply chains, and more. To prevent such outcomes, acquirers must exercise due diligence: analyzing cyber risks, assessing vulnerabilities, examining data assets, and actively identifying warning signs.
Importance of Cybersecurity in Mergers & Acquisitions
During M&A, two or more companies’ unique cybersecurity policies, practices, and IT infrastructures come together. This fusion can bring about security risks and vulnerabilities, potentially leading to data breaches or unauthorized access. Therefore, a robust due diligence process becomes crucial, allowing for an evaluation of the security posture of each organization and the detection of any prevailing gaps or vulnerabilities.
Moreover, integrating cybersecurity teams and establishing a cohesive security framework becomes necessary, guaranteeing a secure and resilient environment after the finalization of the merger or acquisition.
External Vulnerability Scanning for M&A Security
External vulnerability scanning plays a pivotal role in M&A transactions as it identifies vulnerabilities within the target company’s systems and networks. This undertaking empowers the acquiring entity to pre-emptively mitigate possible risks and ensure a secure merger of the involved parties. This strategy fosters a seamless consolidation of assets and bolsters general business resilience by minimizing the likelihood of data breaches and cyber threats.
Steps Involved
Below are the critical steps involved in the external vulnerability scanning process to assess and mitigate potential vulnerabilities in a target company’s systems and networks during an M&A transaction:
1. Identify Open Ports and Services
• Conduct a thorough network infrastructure assessment to identify accessible ports and associated services.
• Analyze network configuration and traffic patterns to document all open ports and services within the merged environment.
2. Detect Vulnerable or Unpatched Systems
• Identify vulnerable services and systems requiring patches.
• Conduct vulnerability scans, system inventory, patch management evaluation, configuration review, continuous monitoring of security advisories, and manual security testing for a comprehensive risk assessment and mitigation strategy.
3. Conduct Holistic External Attack Surface Assessment
• Subdomain Enumeration: Identify associated subdomains to understand the attack surface. Scan and secure subdomains to mitigate potential unauthorized access and breaches.
• Prevent Lookalike Domains: Monitor and detect domains resembling acquired entities to prevent phishing and brand impersonation.
• Address Data Exposure with Dorking Scans: Perform scans to identify sensitive information inadvertently disclosed on search engines, addressing vulnerabilities to prevent data leaks.
• Mitigate Malware Risks: Evaluate acquired entities for malware risks, identifying infected systems or applications to prevent malware spread and data compromise.
• Ensure Strong Cryptography: Assess cryptographic implementations for data confidentiality and integrity. Evaluate encryption algorithms, critical management practices, and SSL/TLS configurations.
• Evaluate Exposed Services & Ports: Identify and evaluate services and open ports on the target company’s external-facing systems. This reduces unauthorized access risks throughout the M&A process.
• Enhance Web App Security with Security Headers: Evaluate security headers of acquired entities, implementing properly configured headers to fortify web application security and guard against vulnerabilities.
• Swiftly Detect Breached Accounts: Identify compromised accounts inherited during the M&A process, taking immediate action to avert unauthorized access and data breaches.
• Assess Git Preying: Evaluate the security of version control systems like Git to uncover exposed sensitive data and shield critical resources.
Essential Steps for 24/7 Monitoring of External Network Assets
- Ensure uninterrupted surveillance of your external network assets by implementing round-the-clock monitoring.
- Employ comprehensive alert systems across external, internal, and cloud resources.
- Set up a dedicated team to cover all entities, ensuring swift incident response and mitigation.
- Deploy an Endpoint Detection and Response (EDR) solution for proactive threat identification and resolution, guaranteeing constant safeguarding of your network infrastructure.
Security Awareness Training for Employees
- Promote a robust security awareness culture amongst employees through targeted training.
- Educate on vigilance and regularly execute phishing tests to bolster their capacity to identify and report suspicious emails.
- Create a dedicated reporting email for security concerns, encouraging proactive incident reporting.
Cybersecurity Best Practices for M&A
- Regular Access Reviews: Conduct regular access reviews to revoke redundant access rights and monitor privileged users to prevent unauthorized breaches.
- Centralized Reporting: Establish centralized reporting mechanisms for informed decision-making, swift issue resolution, and comprehensive tracking of metrics and risks.
- Policy Alignment: Tailor security policies to align with industry standards and the changing M&A environment, ensuring consistent enforcement for better security and operational effectiveness.
- Secure Cloud & M&A Handoff: Strategically transfer cloud-based systems, services, and data with meticulous assessment. Consider compatibility, security, governance, and ongoing support for a smooth, secure transition.
Enhancing Third-Party Service Security in All Entities
Securing third-party services involves implementing various measures to protect sensitive data and mitigate risks:
- Comprehensive Vendor Inventory: Develop a comprehensive list of all utilized third-party services and vendors, enhancing visibility and control over external entities with access to systems and data.
- Enable Multi-Factor Authentication (MFA): Strengthen security with MFA for third-party service access. MFA adds layers of protection, demanding supplementary authentication beyond passwords to prevent unauthorized entry.
- Robust Passwords & Rotation: Enhance security by enforcing robust, regularly rotated passwords for third-party accounts. This helps to address vulnerabilities arising from compromised or weak passwords. Additionally, promote using password management tools to facilitate the generation of secure and complex passwords.
- Data Flow Assessment: Conduct a comprehensive data flow analysis between your organization and third-party services, gaining insights into data types, security protocols, vulnerabilities, and potential risks. This assessment serves to identify areas demanding enhanced security measures and data protection safeguards.
Cybersecurity Protocols for a Secure Transition in M&A
Key protocols for a secure M&A process encompass:
- Comprehensive Cyber Due Diligence
Evaluate the cybersecurity practices of the target company by analyzing its policies, past breaches, and risk strategies. It’s also essential to assess regulatory compliance, team competence, and incident response preparedness. The objective is to identify potential vulnerabilities that could impact the merger’s success. - Thorough Security Assessment
Conduct a thorough evaluation of the cybersecurity infrastructures of both companies, aiming to uncover weaknesses in networks, systems, and applications. Furthermore, execute penetration testing to assess the effectiveness of defenses and security controls. Hence gaining insights into mutual risks and comprehensively understanding the overall security posture. - Effective Incident Response Planning
Develop a comprehensive incident response plan that outlines specific roles and actions for handling breaches. Establish clear protocols for detection, containment, eradication, and recovery. Additionally, offer employee training to ensure swift responses. Work closely with legal teams to address legal and regulatory ramifications, thereby reducing risks following a breach. - Strategic Data Protection
Ensure data security through the categorization of data based on its sensitivity. Implement encryption measures and enforce stringent access controls. Adhere to compliant retention policies, educate employees about secure data handling and effective communication practices. Moreover, devise a secure data transfer strategy for the integration phase, ensuring a seamless and protected M&A process. - Enhance Data Security
Consolidate data meticulously, preventing leakage and unauthorized access while safeguarding intellectual property. The secure integration of these measures preserves sensitive information and proprietary resources, effectively minimizing risks throughout the M&A process.
Role of Strategic Leadership in M&A Operations and Cybersecurity
In the intricate world of mergers and acquisitions (M&A), strong leadership plays a crucial role in connecting various aspects. Beyond cybersecurity, M&A encompasses an array of factors, including financial assessments, due diligence, legal compliance, cultural integration, communication strategies, and stakeholder management. These multifaceted elements demand meticulous oversight and coordination. Organizations must therefore assemble a core team comprising experts in M&A, cybersecurity, legal affairs, finance, and communication. This collective expertise collaboratively crafts a comprehensive M&A strategy that aligns seamlessly with the overarching vision. By harmonizing each aspect of the process, with cybersecurity holding a pivotal role, this dedicated team ensures the precise assessment of risks, well-informed decisions, streamlined operations, and, ultimately, favorable M&A outcomes.
This cohesive approach empowers leaders to adeptly navigate the challenging M&A landscape adeptly, guaranteeing the smooth integration of operational and cybersecurity components for a secure transition. Such leadership-driven synergy is integral to successfully navigating the complexities of M&A.
Accorian: Your Partner for Seamless M&A Cybersecurity Integration
Accorian stands at the forefront of cybersecurity, offering a wealth of strengths explicitly tailored for mergers and acquisitions (M&A). Our distinguished expertise encompasses a fusion of cybersecurity excellence and finely-honed M&A insights. As a result, we are uniquely equipped to guide you through the intricacies of integration after an M&A.
Our approach centers on conducting business-focused information security risk assessments. This methodology provides a practical and precise evaluation of the risk landscape associated with your newly acquired businesses. Our remarkable ability to view your organization’s cyber risk profile from a business perspective sets our professionals apart, ensuring guidance that aligns with your strategic goals.
We ensure that your journey through the complexities of M&A is secure, seamless, and successful.