Cybersecurity Due Diligence for M&A

Pre- and Post-Transaction Assessment Can Uncover Costly Risks

 

Kroll’s cyber due diligence services help you make better better-informed M&A decisions

  • Identify actual cyber security lapses or potential at-risk areas in your targets
  • Quantify remediation costs and help restructure investments if needed
  • Demonstrate data security commitment to stakeholders and regulators
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1 - sample cybersecurity due diligence steps in pre- and post-transaction

Even Sophisticated Companies Can Be Unprepared

The acquisition target looks great on paper — It has an innovative product, a great sales team and a lean approach to expenses. But when it comes to understanding cybersecurity risk, investors should look deeper than self-disclosures.

Around the world, private equity firms, hedge funds, investment banks and venture capital investors are turning to Kroll’s cybersecurity due diligence services to help make better-informed M&A decisions.

Cybersecurity Due Diligence Overview

Independent cyber due diligence from Kroll can help assure that the cybersecurity history and outlook at your target company is strong. Our experts can also help identify material cyber-related weaknesses that must be addressed if you are to avoid or fully account for potential post-transaction risks, fines and costly remediation:

  • Identify information security risks and shortfalls in governance, operations and technology
  • Research undisclosed or unknown data breaches
  • Assess the target’s ability to detect and respond to a cybersecurity incident
  • Quantify potential remediation costs from multiple angles: operational, financial and reputational based on previous or unknown exposures

Pre- and Post-Transaction Services

To provide the most comprehensive coverage, Kroll offers four cyber due diligence modules to help you uncover, assess and address information security risks, both pre- and post-transaction. Each module is customizable for every transaction; additionally, you can select and deploy the combination of services that best matches your risk concerns, speed of the deal, and level of access to the buy-side company.

For organizations seeking to be acquired, positive findings or timely remediation based on these assessments – especially Modules 3 and 4 – can allay potential buyers’ concerns and accelerate a deal's close.

MODULE #1 – DEEP AND DARK WEB EXPOSURE

Kroll’s patent-protected CyberDetectER® DarkWeb contains over 13 years of indexed dark web data that is supplemented every day by more than 3 million files. This enables us to conduct a deep and dark web assessment of unprecedented scope to identify any exposed data or to uncover previously unknown breaches.

 

This high-level screening does not need access to an organization's network, so it can be completed quickly and efficiently. This ultimately paves the way for determining how to best remediate any risks.

 

 

MODULE #2 - COMPROMISE ASSESSMENT*

Kroll CyberDetectER® Endpoint can be quickly deployed across all endpoints in the target organization to search and monitor for known bad and unusual behaviors. When endpoint data identifies existing malware or infection points, Kroll’s cyber security experts stand ready to take appropriate steps to contain and respond to threats.

 

 

MODULE #3 – CYBER RISK ASSESSMENT

Risk assessments are performed using Kroll’s proprietary methodology built from years of incident response and investigations work. We can also adapt our assessments to include industry standard frameworks, such as ISO, NIST, PCI-DSS, HIPAA/HITECH, GLBA, CIS and others to help ensure compliance with all stated regulatory requirements in your sector.

 

Our framework allows for agile assessments that require minimal input from the target company, but can also include a deeper review given access to internal systems.

 

 

MODULE #4 – VULNERABILITY ASSESSMENT / PENETRATION TESTING*

Our professional penetration testing teams will carry out simulated attacks that include examining systems for exploitable vulnerabilities as well as gauging employee awareness by means of social engineering exercises. These tests will provide measurable insight into the real-world risks your organization faces.

 

 

 

*Assessment is often conducted immediately post-transaction or can be performed pre-transaction by those seeking to be acquired.


CASE STUDY: Agile Cyber Due Diligence for Global Investment Firm

A leading global investment firm with over $150 billion in assets under management, aware of the wide-ranging consequences of data security and privacy incidents, sought Kroll’s assistance for the development of a cyber due diligence framework to evaluate the maturity of its mergers and acquisitions targets.

To support a large number of fast-moving investments, the cyber diligence framework had to be as accurate as possible given time constraints and limited access to internal systems.

SOLUTION:

Our Cyber Risk experts developed a security evaluation based on the CIS Top 20 Critical Security Controls to determine a company’s propensity to be breached and overall cyber posture. The light-touch evaluation provided a high-level overview and included three core areas:

  • A review of the existing policies and procedures of the investment target, including incident response plans
  • The completion of a written questionnaire or phone interview
  • An analysis of previous assessment reports (such as SOC 2) when available

IMPACT:

Once implemented, Kroll’s cyber due diligence framework required less than two hours from the investment company’s Information Security team, providing the key insights needed for a more judicious valuation on each deal.


Key Deliverables

Irrespective of which modules are part of the cybersecurity due diligence exercise, Kroll experts will assist you in evaluating the risks associated with a planned acquisition. Deliverables from each of these assessments will provide a detailed analysis of the security posture of the organization and help you to plan a successful integration strategy based on our expert guidance.

 

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