Cyber Security Concerns in M&A Transactions
Why is cyber security such an important consideration in mergers and acquisitions? Because you could be buying an enormous amount of unknown liability. Cyber security is becoming a key factor in analyzing the amount of risk that a financial strategic buyer will take on after an acquisition. A company’s ability to effectively protect its systems and data and mitigate its exposure will have a direct effect on how much a potential buyer is willing to pay for an acquisition.
What is the cyber risk in and M&A transaction? While acquisition specific, in a nutshell it could be the following:
So, generally speaking, what should an acquirer look for when assessing a merger or acquisition?
To fully evaluate the cyber security risks in an M&A transaction specialized cyber security consultants should be hired along with legal counsel. Both the legal and technical risks need to be fully evaluated so that the risks can be properly allocated, the price can be properly adjusted and contingencies can be put in place before completing the transaction. The last thing a buyer wants is to find themselves to be the proud owner of a company facing a cyber security lawsuit. The attorneys at MLMW regularly handle M&A transactions and work with outstanding cyber security consultants and advisors.
(Mallon Lonnquist Morris & Watrous, PLLC, is a business, employment, real estate, and litigation law firm. John Lonnquist is a Colorado business attorney with MLMW, based in Denver, Colorado. John regularly represents clients on cyber security matters and M&A transactions. John can be reached at firstname.lastname@example.org and (303) 722-8261)