Acquiring a company is a major undertaking—regardless of its size. While financial due diligence often takes center stage, overlooking a company’s cybersecurity posture can be a costly mistake. In today’s digital-first world, a business’s ability to protect its data, systems, and reputation is just as important as its balance sheet.
The Overlooked Risk in M&A: Cybersecurity Posture
During the acquisition process, buyers typically focus on assets like accounts receivable, market position, and vendor relationships. But technology infrastructure—and more specifically, cybersecurity—can make or break the long-term viability of a business. A weak cybersecurity posture can expose you to hidden liabilities, compliance issues, and operational disruptions.
5 Must-Ask Cybersecurity Questions During Due Diligence
To assess a company’s cybersecurity posture effectively, here are five critical questions to ask:
1. What Are the Company’s Key Digital Assets?
Understanding what digital assets exist—and how they’re protected—is foundational. These assets may include customer databases, proprietary software, intellectual property, and cloud environments. Evaluate their value, sensitivity, and the potential impact of a breach.
2. Has the Company Experienced Any Data Breaches?
Past breaches can reveal vulnerabilities in the company’s cybersecurity posture. Ask about the nature of any incidents, how they were handled, and what changes were made to prevent recurrence.
3. Can the Company Recover from a Cyber Attack?
Resilience is key. Assess the company’s incident response plan, backup systems, and disaster recovery protocols. A strong cybersecurity posture includes the ability to detect, respond to, and recover from attacks quickly.
4. Is the Business Compliant with Industry Standards?
Different industries have different cybersecurity requirements. Whether it’s HIPAA, PCI-DSS, or GDPR, ensure the company meets relevant standards. Non-compliance can lead to fines, legal issues, and reputational damage.
5. What Security Policies and Tools Are in Place?
Take inventory of the company’s cybersecurity tools—firewalls, antivirus software, encryption, and monitoring systems. Review internal policies around data protection, access control, and employee training. A mature cybersecurity posture includes both technology and governance.
The Human Factor: Employees and Cybersecurity Culture
Even the best tools can’t protect against poor habits. Employee negligence is one of the leading causes of cybersecurity breaches. Evaluate the company’s culture around cybersecurity:
- Are employees trained regularly?
- Do they follow established protocols?
- Is there a willingness to adapt and improve security practices?
Resistance to change can be a major obstacle. Improving cybersecurity posture often requires leadership, ongoing education, and a commitment to best practices.
Final Thoughts
A company’s cybersecurity posture is a critical component of its overall health. Ignoring it during the acquisition process can lead to unexpected risks and costs. By asking the right questions and conducting a thorough assessment, you can make informed decisions and protect your investment.
📞 Need help evaluating cybersecurity posture during M&A? Contact us for expert guidance.
Charles Lobert, has been in the Detroit Metro Area’s IT industry for over two decades & with VCS since ’04. Throughout the years, Lobert has held nearly every position at VCS & is responsible for several major organizational shifts within VCS.