Mergers and acquisitions (M&As) are significant achievements for a business. Despite the desire to celebrate your accomplishments, though, you must also make sure that you take extra steps to ensure your cybersecurity during M&As. During a merger or acquisition, your company is exposed to additional cybersecurity threats. According to the 2020 Cyber Leadership Institute analysis, several factors prompted the rise in M&A-related cyber risk, with the four listed below particularly significant due to their complexity and implications. However, with proper cybersecurity training and the support of IT-managed services, you can make sure your M&As go smoothly. Here we review four security risks to watch out for during an M&A and how to prevent them.
M&A Security Risk #1: Make You an Exciting Target for Cybercrime
Simply announcing your merger or acquisition puts a target on your back. Cybercriminals don’t just randomly select companies to breach. Instead, they look for vulnerable targets. You are rarely more vulnerable than during M&As. Criminals know this, and they scour news reports for upcoming M&As. This phenomenon has become a widespread concern among CEOs of companies of all sizes. Even Columbia law professors have taken the time to study the dynamics of cybersecurity during M&As.
In a recent article published on Columbia’s Law School Blog, CLS Blue Sky, two researchers concluded that not only does cybersecurity risk increase during M&As, but M&As are most likely to fall through when cybersecurity issues arise. They cited several examples of failed mergers and reduced price offerings for acquisitions due to cybersecurity problems. In addition, they found that risk increases after announcing an M&A. So, simply engaging in the M&A process increases risk. How do criminals take advantage?
M&A Security Risk #2: Data Transfers Between Entities Pose a Risk
Any time there is a merger or acquisition, companies must transfer large volumes of data to consolidate their files. This act puts those files at risk if the transfers aren’t done properly. Criminals look for opportunities to intercept or exfiltrate data as it’s being transferred. If proper protocols are not used, your data could easily be pilfered while it travels from one location to another. However, most IT professionals know to use secure protocols and encrypt data to avoid this.
Nevertheless, there are still ways for criminals to acquire data in transit. Encryption uses a security key that devices on both ends have. A compromised device could have a valid encryption key, allowing criminals to access your data. Malware attacks are common on companies during the M&A process. Often, the goal is to infect a computer and gain access so criminals can steal data. This is why it’s important to have 24/7 monitoring on all your devices.
M&A Security Risk #3: Associates Are Susceptible to Phishing Scams
One of the most effective methods cybercriminals use to gain access to your systems is phishing. Making matters worse, phishing is made much more effective during M&As. Consider an example. ABC Enterprises plans on acquiring XYZ Organization. Workers at both businesses are informed of the upcoming acquisition. An associate at XYZ Organization gets an email that looks like it comes from ABC Enterprises, asking them to set up an account. The XYZ Organization team member signs up immediately.
Now criminals have an associate’s access credentials and can enter your system at will. Criminals created a domain that looked similar to that of ABC Enterprises. They used the company’s logo and fonts to make the email even more convincing, and since the associate wasn’t yet familiar with company ABC, they didn’t notice minor inconsistencies. Cybersecurity training for your staff is vital to prevent these attacks.
M&A Security Risk #4: Dismissed and Disgruntled: Former Workers Threaten Your Data
Most M&As result in some job cuts. In extreme cases, few staff members of an acquired organization may remain. Naturally, some former workers may find themselves frustrated at suddenly losing their job. That frustration can turn into malicious action. Employees have deleted data or leaked private documents to vent their anger. Some may assume that since they are going to lose their job anyway, they have nothing to lose.
To mitigate this risk, monitoring your associates’ activity and filesystem activity is important. IT-managed services can help secure your company against all the risks we’ve mentioned.
How Do IT-Managed Services Improve Security During an M&A?
Managed services will assess your company’s security and take steps to reduce your cybersecurity risk before you begin your M&A process. By installing software that monitors user access and your filesystem, we can detect unusual access to your data. For instance, if a team member were to suddenly log on from a different location at an unusual time, the system could flag this activity as suspicious. Perhaps their credentials were stolen in a phishing attack.
Likewise, your IT staff can be alerted to the transfer if lots of data movement is detected. This transfer may be a normal part of your merger, but it could also signify that someone is moving lots of data offsite without your permission. Monitoring software helps to keep a watchful eye on your company’s data. That’s not the only thing managed services to help your company stay safe.
Cybersecurity Training for Your Staff
Cybersecurity training for your staff is essential. Not only should your current staff undergo a regular training regimen, but your newly acquired associates should also be brought up to speed. We aim to teach your team to recognize phishing scams, employ data management best practices, and secure their devices from malware. Your staff is always the weakest link when it comes to cybersecurity.
Effective training means you don’t have to impose strict restrictions that hamper productivity. Instead, you can trust your workers to make smart decisions that keep your company safe.
Standardizing Practices Across the Board
Companies usually have unique approaches to cybersecurity. After an M&A, you need to standardize your practices. However, the organization you acquired may require you to implement new cybersecurity protocols. Managed service providers can analyze both companies’ practices and make the necessary adjustments.
Before you begin your next merger or acquisition, make sure you put cybersecurity first. Contact Edafio Technology Partners to learn more about our managed IT services and how we can help your company grow safely.
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