Throughout the years we have seen a great number of our clients show interest in other companies; this can be achieved in several different ways, but it’s usually completed through an M&A process.
While M&A deals are significant milestones and deserve to be celebrated, the process involved creates a period of stress on the buying side as well as the selling side. Both endure a long and arduous process to make the transaction happen, tackling each working function of the business to come to a satisfactory close.
If you have ever been involved in the M&A process, you understand that timing is exceptionally crucial for a smooth transition. Emotions run high, and at the moment of announcement, there’s a sudden urgency for both companies to access the same files, account for the same email domain, merge accounts using third-party vendors – and so on.
This dynamic level of security access requires the two companies’ identity systems to work together.
However, in the midst of this pressure, the rush to provide seamless access can create enough room for disastrous security consequences:
In fact, 62 percent of businesses say that they face significant cybersecurity risks by acquiring new companies and that cyber risks are their biggest concern post-acquisition. Additionally, by 2022, 60 percent of businesses will consider a target company’s cybersecurity posture as a critical factor in their due diligence process.
Evaluating M&A Cybersecurity Risks Takes Time and Resources
By welcoming in new users that haven’t been part of the buying company’s security program, vital weak points are exposed and essentially defenseless. They also blend identity and access management (IAM) infrastructure, policies and administrative processes- all of which may not share the same cybersecurity standards.
There is an even greater level of risk exposure if both companies utilize active directory as their core identity store – as a majority of businesses do. Active directory (AD) is a weak target for cyberattacks because of particular security gaps and misconfigurations that have accumulated over the years. Bringing two companies’ active directory configurations together in a successful way can be a daunting task, but here are some tips to reinforce your protection methods.
At MCDA CCG, we believe that arming teams with the adequate time and resources to conduct a thorough assessment of cybersecurity risks is critical to mitigate potential attacks. Maintaining and increasing cybersecurity before, during, and after M&A activity requires:
A Strategic Plan
Instead of delaying security evaluations until moments before the deal closes, both sides of the M&A should have ongoing assessments of new threats of exposure. Implement compliance privacy policies based on the organization’s profit model, location, and industry. If a company states that its business does not require implementation of a specific policy, assess the reasoning behind that decision, and maintain a policy that requires a review of the target company’s privacy compliance requirements.
Evaluate Hybrid System Weak Points:
Throughout the M&A process, the two merging companies will likely be at entirely different points to the cloud. Many organizations have implemented hybrid identity systems that utilize both on-premises and off premise AD. As demand for access across organizations increases, continuous monitoring for new threats across the hybrid identity system is essential to block potential attack entry points.
Analyze Past Incidents
Evaluate previous incidents to determine what system vulnerabilities, policy or training gaps contributed to the incident, and document the steps taken to correct those issues.
Confidence In Recovering Attacked
While a company may have a strong disaster recovery plan, its useless if it’s not cyber-resilient – meaning that you could quickly recover all the company’s domain controllers if attackers infected them or wiped them out – then the entire merged organization’s business operations are at risk.
Businesses that are currently on or considering the M&A journey are wise to be concerned about the cybersecurity risks of joining two entities. However, a carefully developed plan for identity and access management between the two companies is essential to keep cyber attackers at bay during the transition period – when every cybersecurity process, protocol and assumption will be tested.
At MCDA CCG, Inc. we have experienced, trusted M&A advisors and leading cybersecurity resources to mitigate your cybersecurity threats while helping you make your transaction a 100% success. Contact us today by calling our office headquarters in Placentia, Orange County, California, and let’s discuss your current position in a free, no obligation conversation. With our ongoing guidance and direct support, we are certain that we can save you time and money while reinforcing your cybersecurity posture.