Mergers and acquisitions are complicated. Companies making an acquisition have multiple critical challenges to address and manage, from financial due diligence and technical integration to cultural considerations, complex legal and regulatory compliance tasks.
There are so many things to consider that it’s easy to miss an increasingly important one in this digital age— cyber risk.
During a merger and acquisition (M&A) process, the scope of the organization’s attack surface is stretched to new limits. Every company, from Fortune 500s to smaller enterprises, has digital baggage that can dramatically increase potential security risks, from multiple generations of technologies, various IT stacks, and new and unknown risks in their environments. The mergers and acquisitions process can be an especially sensitive time for an enterprise, and one that is prone to security gaps and exposure. When you add a high-stakes merger or acquisition, the potential threat exposure from all these disparate components skyrockets.
Threat exposure management is the process of assessing and managing cybersecurity risks and vulnerabilities. While it’s an essential approach for every company to use to reduce risks on an ongoing basis, it’s a critical part of any well-managed merger or acquisition process.
M&A deals can be derailed by critical cybersecurity incidents. As such, cybercriminals and ransomware actors actively target companies involved in M&A so they can increase their leverage by using the fear of exposure to extract payments. Another consideration is that high-value data can be exposed as an acquired company’s assets are merged into the core business operations. Threat actors are quick to look for and identify these types of exploitation opportunities whenever companies announce an M&A.
Unwanted surprises are not what companies look for during the M&A process. Yet, without putting a threat exposure management program in place, organizations can be left in the dark regarding the cybersecurity risks associated with the company they are acquiring. They can only truly make informed decisions as they navigate through the merger or acquisition process if they completely understand the cyber risks.
This generally wasn’t as big of an issue ten years ago, when an organization’s IT footprint was more internal and contained. But these days, almost every company has invested heavily in cloud services, third-party applications, and an extensive network of integrated partners, suppliers, customers, and more. With all that digital transformation, most companies’ threat attack surfaces have grown significantly, and along with it, their cyber risks. To add additional complexity, today’s digital supply chains don’t end with those partners or third parties but go beyond them, as their own applications and platforms likely reference additional tiers of software components and services, compounding the length and complexity of the digital supply chain.
Unless an organization proactively analyzes a target organization’s extended digital supply chain, they’re leaving themselves open to a wide range of cyber risks. If the digital supply chain of a target company is unknown and unanalyzed, it will be an inherited liability for the acquiring company—something no proactive company wants.
Solving this problem isn’t hard, but it takes some planning and management. There are three main components to the solution:
Create a continuous discovery process. Start by putting an attack surface management capability in place. This enables an organization to discover the actual attack surface they are dealing with, from Internet-facing applications to extended digital supply chains. External attack surface management can provide systematic threat exposure to manage an acquisition target’s security posture.
Assess and prioritize the risks. Possible vulnerabilities need to be identified and prioritized based on the threats to the organization. This can be especially tricky when dealing with extended digital supply chains because external vulnerabilities might be direct risks to the external organization but not the primary company. As attackers become increasingly sophisticated, it’s more important than ever for an organization to adopt the attacker’s “point of view” to help identify the actual extended risks. This means mapping both organizations’ entire attack surface and digital supply chain during the M&A process. By combining threat intelligence and business priority ranking, organizations can put exploitable risks in focus. In addition, advanced machine learning and AI can help minimize noise and identify real threats.
Mobilize remediation with effective collaboration. Security teams are already struggling to identify asset owners within their own company. This struggle is exacerbated by the twofold challenge presented by a merger and acquisition. They need to break the security silos across all teams by combining complete visibility with the needed access control throughout the entire process. With continuous discovery and attribution, followed by prioritized remediation actions, the acquiring company can effectively secure the dynamic attack surface as two companies merge into one.
But most importantly, because of the depth and breadth of the problem, any real solution requires a programmatic approach. A programmatic approach allows an organization to discover more threats, automatically prioritize the actions needed, and remediate them faster. Given the scale and complexity of the challenge, it’s impossible for even the most progressive organizations to manually evaluate, assess, and remediate the extended digital supply chain of even a small company, let alone a large company. Equally important is that a programmatic approach can help continuously improve the organization’s threat posture over time.
When one company is purchasing or merging with another, it’s not only buying their business, employees, resources, customers, and expertise but also purchasing that company’s digital attack surface and all the potential cyber vulnerabilities that come with it.
That’s why it’s never been more critical for organizations to put a continuous threat exposure management program in place during the M&A process to ensure they’re not only being proactive but also being protected. The best M&A process is one without surprises, and a CTEM program helps companies eliminate unwanted cyber surprises.