M&A can increase the value of a company, but they can also expose them risks. Companies that do not take care to safeguard data during M&A deals can face expensive fines and a loss of trust in the digital realm. The good part webdataroomcenter.net/an-efficient-board-meeting-agenda-template-for-nonprofits is that a well-planned and implemented privacy due diligence process can help to reduce these risks.
Many M&As are defined by the presence of sensitive data, which could be affected by legal and regulatory issues. This is particularly applicable to M&As that involve highly-regulated industries such as finance or healthcare. In these situations the parties might need to conduct a second review of compliance with regulatory requirements as part of the due diligence process.
Before closing, a buyer must understand the extent and type of risk involved 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 vital to obtain a true picture of their current situation, including any policies or procedures that could be problematic in an M&A scenario.
It is crucial to include in the contract of sale forward-looking clauses which require sellers to enhance their data protection policies before closing. This will not only ensure compliance with the law applicable to them and reduce liability after closing and minimize the impact M&A activity has on future data breaches.