M&A can increase the value of a company However, they could also expose them risks. Companies that fail in M&A transactions to safeguard their data could face expensive fines and lose trust in digital media. The good thing is that a well-planned and implemented privacy due diligence process can help mitigate these risks.
As a result, many M&As include a lot of sensitive information that could be impacted by regulatory issues and webdataroomcenter.net/an-efficient-board-meeting-agenda-template-for-nonprofits legal issues. This is especially relevant for M&As which involve highly-regulated industries, such as healthcare and finance. In these cases, the parties may be required conduct a separate audit of regulatory compliance during the due diligence process.
Before closing, the buyer must be aware of the amount and type of risk 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 such as the California Consumer Privacy Act. Interviewing the target’s personnel responsible for security and privacy is vital to obtain the full picture of their situation, which includes any policies and procedures which could be challenging in an M&A scenario.
It’s crucial to include forward-looking clauses in the sale contract that require the sellers to improve their data protection practices prior to closing. This will not only ensure compliance with the law applicable to them and reduce post-closing liability and mitigate the impact M&A activities have on the likelihood of data breaches in the future.