Protect Data in Merger and Acquisition Deals

While M&A deals can increase the pop over to this site value of the company’s assets but they also expose it risk. Companies that fail in M&A transactions to protect data may be subject to costly penalties and lose trust in the digital world. The good part is that a well-planned and implemented privacy due diligence process can help to reduce the risks.

In the end, many M&As involve a lot of sensitive information that could be impacted by regulatory concerns and legal issues. This is particularly relevant in M&As that involve highly-regulated industries like healthcare and finance. In these cases, parties may be required to conduct a separate examination of regulatory compliance as part of the due diligence process.

Whether the target’s data is subject to regulations specific to the sector like the Gramm-Leach-Bliley Act or the Health Insurance Portability and Accountability Act, or general consumer privacy laws like the California Consumer Privacy Act, the buyer must be aware of the degree of compliance and risk involved in the deal prior to closing. It’s important to interview the targets’ personnel who are responsible for privacy and security of data to obtain a clear understanding of their situation, including the policies or procedures that could pose a problem in a M&A scenario.

It’s important to include forward-looking covenants in the sale contract that require the sellers to improve their data protection practices pre-closing. This will not only ensure compliance with the law applicable to them, but also reduce liability after closing and minimize the impact M&A activities have on future data breaches.