Protect Data in Merger and Acquisition Deals

M&A can boost the value of a company However, they could also expose them to significant risks. Businesses that fail to comply with M&A transactions to safeguard information could be subject to costly fines and lose digital trust. A well-planned, implemented privacy due diligence program can help reduce these risks.

Therefore, many M&As involve a lot of sensitive data that can be impacted by regulatory concerns and legal issues. This is particularly relevant to M&As that involve highly-regulated fields such as finance or healthcare. In those instances, the parties may need to conduct a second review of regulatory compliance as part of the due diligence process.

The data of the target may be subject to regulations specific to the sector like the Gramm-Leach-Bliley Act or the Health Insurance Portability and Accountability Act, or even general consumer privacy laws like the California Consumer Privacy Act, prospective buyers must know the level of compliance and the risk involved in the transaction prior to closing. It’s important to interview the targets’ personnel who are responsible for privacy and data security to obtain a clear understanding of their compliance, and also the details of any policies and procedures that could be problematic in an M&A scenario.

It is important to include in the contract of sale forward-looking covenants which require sellers to improve their data security practices prior to closing. This will not only aid in ensuring compliance with applicable laws and regulations, but it’s also an excellent way to minimize liability after pop over to this site closing and lessen the impact of M&A activities on the likelihood of data breaches.