You are only as strong as your weakest point: cybersecurity risk in the M&A process
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Why is a company only as strong as its weakest cyber point in M&A?
I i in simple terms, the key issue here is that a company is only as strong as its weakest point from a cyber perspective.
Inevitable you you refine companies occasionally that is of substandard quality and then you have to figure out uh how to deal with that. Is this still a viable purchase? Uh can you basically churn them in your own system? Do you have the the kind of programs in place to kind of bring them up to speed if need be.
think something that is often overlooked as part of MA and and especially as it turns turns into risk or in terms of risk is the people aspect.
My name's Jason Richards. I'm the head of portfolio technology and cybersecurity here at HG. Today I've got the pleasure of being joined by my colleague Callum Thompson, as well as Espen Agnot Johansson of Visma and John Strasser of Sovos, both experts in cybersecurity in companies that are familiar with the risks and benefits of MA. Hi guys, thanks so much for joining me.
What are the biggest cyber‑risk challenges when acquiring a new company?
Thank you for inviting us.
Very
much so. Definitely glad to be here.
It's a great topic. Callum, did you want to take us off?
Yeah, absolutely. So cybersecurity risk with new MA transactions is one of the larger challenges that we face, not only as HG as an investment company, but it's also a challenge faced by our portfolio companies, especially those that are quite acquisitive. And companies in the you know the wider landscape around us. In simple terms, the key issue here is that a company is only as strong as its weakest point from a cyber perspective. And when you acquire another organization, you're not only getting that company, um, you're also getting any sort of inherent risks it may have from a cyber perspective. Um so this introduces a sort of unique set of challenges because what you can Can find as smaller organizations which have recently been acquired can be used to attack the acquiring entity and things like that.
And one of the other challenges here is how do you define procedures for something that varies so heavily? So MA transactions, you will not get two that are alike. You know, the people involved, the technologies, the processes vary quite heavily. And so it's a real challenge. challenge defining a standard method to assess companies in this manner. Um and I don't know, Esmin and John, it would be really good to get your views on sort of what are some of the the key challenges in this space and what are the the sort of key risks with MA transactions from a cyber perspective.
First and foremost, with any acquisition, visibility and understanding is the key and really what you're driving towards.
How can visibility and early‑stage due diligence uncover hidden threats?
You know, with the visibility, with the understanding, then you can identify the particular problems and issue areas of a company. You can identify where they're strong, where they may need assistance. And then you can also begin to create that. Roadmap for acquisition. It also, if you're looking at it in the pre-acquisition phase, can and should be identifying any areas that could be showstoppers. You know, there there have been many instances in the recent past where a company has acquired a new entity and then are very quickly hit with regulatory and compliance fines because of undisclosed data breaches. You know, we look at a a hotel chain recently that acquired a different entity and and um had some fines right away.
A European telco uh um internet search engine provider also massive amounts of fines and data breaches due to undisclosed um a tax that um then became the company's liability. And ultimately that's the key. As soon as that deal is closed, all of the liabilities of the acquired company are now yours.
Yeah. It's also interesting that you should mention that, John, because as a pre kind of pre-study for for this um talk, I had a round with legal just to figure out kind of what legal instruments we had to play with, apart from this normal technical and cyber instruments. And one of them was in the the PSA agreement, like the or the SPA agreement, like the share purchase agreement. Where you can make uh basically warranties for for old um old uh old stuff that is uh left behind when you buy it.
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Chapters
8 chapters
1
Why is a company only as strong as its weakest cyber point in M&A?
0:07–1:10
2
What are the biggest cyber‑risk challenges when acquiring a new company?
1:10–2:52
3
How can visibility and early‑stage due diligence uncover hidden threats?
2:52–5:02
4
What legal tools (e.g., warranties in the SPA) can protect against undisclosed breaches?
5:02–8:06
5
How should you scope and prioritize cyber‑assessment activities under tight timelines?
8:06–11:17
6
What practical steps can be taken to integrate the acquired company’s security posture quickly?
11:17–17:42
7
Why is deal secrecy critical for preventing attacker exploitation during M&A?
17:42–22:00
8
How can post‑acquisition automation and tooling create a sustainable security program?
22:00–37:18
Speakers
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