Protect Data in Merger and Acquisition Deals

M&A can boost the value of a business However, they also expose them to significant risks. Companies that do not take care to safeguard the privacy of their data during M&A deals can face expensive penalties and lose trust in digital technology. The good news is that a well-planned and implemented privacy due diligence process can help mitigate these risks.

Therefore, many M&As involve a lot of sensitive data that could be impacted by regulatory issues and legal issues. This is especially applicable to M&As that involve highly-regulated fields such as healthcare or finance. In such cases parties could need to conduct a further review of compliance with regulatory requirements as part of the due diligence process.

Before closing, the buyer must understand the extent and type of risk that is associated with the transaction. This includes any sectoral regulations such as the Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act or even consumer privacy laws like the California Consumer Privacy Act. Interviewing the target’s personnel responsible for security and privacy is important to get an accurate understanding of their circumstances, including any policies and procedures which could be difficult to follow in an M&A scenario.

As a result, it’s imperative to include forward-looking provisions in the sale contract that will require sellers to enhance their data protection practices pre-closing. This will not only aid in ensuring compliance with applicable laws, but it’s also an excellent way to minimize post-closing liabilities and mitigate the impact of M&A activity on future data breaches.

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