It’s clear that cybersecurity is no longer just a long list of things to verify during due diligence, but is instead a critical indicator of a company’s overall health and potential. As a result, it is becoming more important in corporate valuations, mergers and acquisitions, and initial public offerings (IPOs).
Businesses are realizing that the crucial and often stressful weeks and months around commercial transactions are a prime target for hackers. Many businesses, however, still don’t grasp how cyber risk is linked to business goals, and due diligence for analyzing such risks isn’t well established.
When making an acquisition, bringing on a partner, or going public, investors, managers, and entrepreneurs might take the following steps to protect their interests and companies.
Also Read: How Enterprises Can Build an Effective Cybersecurity Work Culture
Assess the cyber-risk
Companies assess the entire business risk before considering an investment, acquisition, or even going public. This should also take into account cybersecurity threats and assign a monetary value to them, which will influence the final valuation.
This necessitates cybersecurity professionals collaborating with the leadership team to determine not just what digital vulnerabilities may exist, but also what assets they can lead hackers to and what this could entail for the company’s reputation.
In a recent IBM analysis, “Assessing cyber risk in M&A” it was found that a data breach at Uber resulted in a 30% drop in the price Softbank paid for a stake in the ride-sharing company. At the same time, if done correctly, cybersecurity can increase a company’s potential value, thus this should be considered.
Look through every potential breach
Examining how a firm tackles cybersecurity might reveal information about its general discipline and culture. If a company’s security specialists are inspecting a potential partner’s security and discover that they have not fixed vulnerabilities discovered months ago, it could be a sign that they do not move swiftly and efficiently in other areas as well.
When a company is considering an IPO or other significant milestone, it should keep this in mind as well; potential investors will be looking at not only how secure its data is, but also how well its cybersecurity operations are run and the degree of expertise on the team.
Don’t forget about the vendors
As supply chain attacks become more common, all potential backdoors to previous vendors, partners, and consumers that could be left accessible to hackers should be closed and secured. This is another phase that necessitates tight collaboration between a company’s cyber professionals and the due diligence process’s business management.
Also Read: Defending Against the Risk of Compromised Cloud Accounts
Hire external specialist
As soon as a business considers an IPO, sale, or another significant milestone, it should begin working with independent consultants to conduct a cybersecurity audit, comparable to engaging an accountant to do a financial audit. Even if a company has recently completed a cybersecurity assessment, it is critical to repeat it as it prepares for an IPO or merger and acquisition. This is due to the fact that it is such a critical moment for the organization, and threats are always growing.
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