Data Loss Threatens M&A Deals

One of the most popular breakout sessions at Evolution17 featured a great merger and acquisition (M&A) scenario: Midway through the deal, critical information leaks, devastating the value of the deal. How can you figure out how much info leaked—by whom and to whom?

Here’s why that storyline was so riveting: 2016 saw more than $3.5 trillion in M&A deals. And the vast majority of those deals revolved around valuations of intellectual property (IP), which today makes up about 80 percent of a typical company’s value. If you’re a buyer organization, consider these questions:

• Are you aware of all the IP within the target company?
• Can you be sure all this IP will come with the deal?
• Can you be certain it won’t leak to a competitor?

Data loss is a growing M&A problem
For most buyers, the answers to the questions above are no, no and no. This lack of visibility and security for the very assets a company is buying is startling, and it’s increasingly impeding the success of M&A deals. A 2016 survey of dealmakers found that about three in four M&A deals end up getting delayed—sometimes indefinitely—by data loss. Those that eventually get back on track often end up hobbled by missing data. Experts say this is a big part of the reason that 80 percent of M&As fail to achieve their potential or expected value.

M&A amps up the insider threat
Data loss is increasingly common in M&A for the same reason it’s increasingly common throughout the business world: More than half of all enterprise data now lives on endpoints, beyond traditional visibility and security tools centered on a network drive or central server. If the target company can’t see what its employees are doing with data on their laptops and desktops, then a potential buyer has near zero visibility. Couple that with the unique circumstances of an M&A deal and you’ve got a much higher risk of insider data theft. Laid-off employees freely take their endpoint data—sometimes for personal gain, other times just to sabotage their former employer. Those that do stick around tend to feel little loyalty toward their new company, lowering their inhibitions toward selling or taking data for personal gain.

There’s a better way to protect IP during M&A deals
IP is what an acquiring company is buying—the info that is critical to the value and competitive advantage gained through a deal. To make the most of an M&A opportunity, buyers need a better way to collect, protect and secure all data living on a target company’s endpoints—before, during and after a deal. Fortunately, with the right tools, a buyer can gain complete visibility of all endpoint data, take control of valuable IP and drive a deal to its most successful outcome.

Don’t let data loss sink an M&A. Read our new white paper, Best Practices for Data Protection During Mergers and Acquisitions.

Jeremy Zoss, Managing Editor, Code42

[Cloud Security Alliance Blog]