M&A transactions include a wide range of risks and subsequent due diligence to mitigate them. Given then anticipation of an M& rebound heading into 2025 and the mas amount of boomer business owners looking to sell, potential buyers and deal makers are keen on protecting their strategic moves by ensuring a strong cybersecurity posture.
40% of M&A deals still suffer from inadequate due diligence that doesn’t allow companies to capture truly transformational value, according to McKinsey.
Why Cybersecurity Due Diligence is Critical to M&A
About 60% of companies involved in M&A activity consider cybersecurity posture a crucial factor in the due diligence process. From the point of view of the buyer of a business, cybersecurity assessments;
- Help identify potential risks and vulnerabilities
- Provide assessors data to perform proper valuation of target’s information assets, in turn total value of the entire business
- Uncovers previous data breaches that were previously undisclosed
- Evaluates the potential costs of past and future breaches
- Diminishes the risk of future breaches, avoiding fines, litigation, reputational damage and customer loss
- Help potential buyer preserve an established value in the future
Impact of Cybersecurity On Valuation
Cybersecurity finding an risks can greatly impact a company’s valuation during negotiations. Impacts include:
- Purchase Price Reduction due to direct cost to update infrastructure or potential regulatory fines
- Future earnings adjustments due to revenue impacts from customer loss and operational disruptions from a breach
- Revision of negotiation terms following the disclosure of certain cybersecurity vulnerabilities including the purchase price being subject to holdbacks or buyers requiring warranties against future breaches.
Cybersecurity Measures To Implement Now
From the point of view of an operator or seller of a business, having a comprehensive cybersecurity system in place should include,
- Darkweb Monitoring
- Email Threat Protection
- Cybersecurity Training & Phishing Simulations for Employees
- Network Intrusion Monitoring
- Secure Internet Browsing
- Endpoint Detection & Response
- Cloud Environment Threat Alerting
- Cloud & Network Automated Backup
- Routine Cloud & Network Security Audits
Key Takeaways
- Cybersecurity standards are becoming increasingly required in M&A transactions, becoming as critical of focus as financial, legal or operational concerns.
- Cybersecurity due diligence can effect the valuation and negotiations process impacting purchase price, deal terms, future earnings and reputations.
- Companies that proactively have cybersecurity processes in place with a clear proof of compliance in their infrastructure are better positioned to benefit from M&A transactions moving forward.
Solutions
At DoubleChecked, our mission is to make enterprise-grade cybersecurity solutions accessible, affordable, and effective for small-to-medium businesses. We leverage the latest AI-powered applications and integrations to secure your email, cloud, network, devices, and employees—helping you strengthen security protections and maintain compliance so you can focus on growing your business.
We work with companies across industries, including manufacturing, healthcare, legal, finance, retail, and construction, to create tailored solutions that provide business owners with peace of mind. Our approach ensures compliance with industry regulations while minimizing the financial and reputational risks of cyberattacks.
Learn more at DoubleChecked.com