The Critical Role of Cybersecurity Due Diligence in Healthcare M&A 2-25-25
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What is the critical role of cybersecurity in healthcare M&A?
This is Scott Becker with the Becker Private Equity and Business Podcast. We try each day to bring you brilliant people from the business and private equity world. Today, we're thrilled to be joined by two leaders from VMG Health. We're going to talk about cybersecurity due diligence in M&A transactions and its critical role. We're joined today by Brian Wilson and Chad Zoratek, both managing directors at VMG Health. Brian, could I ask you to take a moment to introduce yourself and tell us a bit about what you do? And then, Chad, I'll ask you to do the same. Happy to do so, and thank you again for having me. Very happy to be here. Just a little bit of background about me. I've been in the consulting business for about 30 years, and having been a partner at a couple of different big four firms was exciting. lucky enough to land with BMG Health. And today I lead their cybersecurity risk and AI division.
So I've got a lot of great context and insight on cybersecurity and why that's relevant in M&A transactions, particularly as it relates to healthcare entities. And really looking forward to the conversation. Thank you very, very much. And Chad, can I ask you to do the same?
Similar to Brian, I have over 30 years of experience consulting primarily around the M&A space. I am a managing director with VMG Health and lead our transaction advisory service division from a financial due diligence perspective. And so I'm also interested in hearing and participating in today's discussion and talking more about the cybersecurity part of the equation.
Thank you very, very much. And talk about, Brian, why don't you lead us off? Talk to us about, you know, so much of deal and diligence is built around financial due diligence, legal due diligence, quality of earnings. Why is that not enough? Why is that not the core of diligence? And why are some of these other things so important too? Well, that's a great question. And, you know, I kind of, I think back to the days before data breaches were commonplace and we were all getting emails about, you know, kind of monitoring services because our data has been exfiltrated and is available for sale on the dark web.
Why is financial due diligence alone not enough?
So I think you kind of got to go back a little bit in time and think about what traditionally the due diligence process was all about. And then when you kind of move forward through time and even just this year, there's some very good examples of recent data breaches that affecting millions and millions of individuals. And so what does that mean? You know, if you're looking to acquire or sell a health care company on the buyer side, you know, certainly, you know, the risks that you may be assuming may not be apparent. And I think that's definitely worth exploring and understanding, really getting behind the firewall, if you will, around what kind of systems and infrastructure do they have? How is it operated? When was their last incident?
If they've had an incident, what's their playbook if they have one? And on the sales side of the equation, it's really you want to make sure that you're doing everything you can to support the value, right? And being a good potential partner to the acquiring entity, et cetera. And really a lot of what we would frame as cyber due diligence as part of an exercise today It's really kind of basic block and tackling for cybersecurity, particularly in the healthcare space in terms of knowing what you have, having inventory and asset list and security and threat assessments and all sorts of other good stuff. It's stuff that should be there already, but because of the way that healthcare operates and there's a lot of moving parts and there's a lot of buying and selling and everything in between, there's gaps. There's inevitably gaps in the M&A process that you know, really needs to be looked at holistically.
Fantastic. And Chad, you do so much work in the financial health care sector. Where are some of the places where you end up seeing sort of cybersecurity and some of these issues prop up as well?
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Chapters
6 chapters
1
What is the critical role of cybersecurity in healthcare M&A?
0:00–2:10
2
Why is financial due diligence alone not enough?
2:10–6:47
3
What are the key cybersecurity risks in healthcare M&A?
6:47–10:35
4
How can buyers assess cybersecurity strength when acquiring healthcare companies?
10:35–18:30
5
What are leading practices for cybersecurity due diligence?
18:30
6
How have perceptions of cyber diligence changed in healthcare M&A?
15:51–21:13
Speakers
1 identifiedMore from Becker Private Equity & Business Podcast
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