Cybersecurity and Information Governance Considerations in Mergers and Acquisitions

The growing impact of cyber incidents has led to a heightened need to conduct a thorough cyber due diligence both before and after an M&A deal.  In a recent webinar, Reed Smith partners Anthony J. Diana, Courtney C.T. Horrigan, Mark S. Melodia and Richard D. Smith shared insight on how cybersecurity affects the valuation of certain assets and offered advice on how to focus due diligence to detect and assess cyber risks pre-transaction, including litigation risks that can arise from data breaches.  They also recommended specific steps for planning post-closing data integration and evaluating the adequacy of insurance coverage.  See also “Designing and Implementing a Three-Step Cybersecurity Framework for Assessing and Vetting Third Parties (Part One of Two),” Cybersecurity Law Report, Vol. 1, No. 1 (Apr. 8, 2015); Part Two of Two, Vol. 1, No. 2 (Apr. 22, 2015).  There has been a flurry of data breach activity over the past 10 years, and “it is only increasing in pace,” Melodia noted.  A company’s cyber risk can directly affect its value in an M&A context.  This is where “cyber risk meets the deal,” he said.

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