While M&A deals can add value to the company’s assets but they also expose it risk. Companies that do not take care to safeguard information in M&A deals can face expensive penalties and lose trust in digital technology. The good part is that a well-planned and implemented privacy due diligence process can help mitigate the risks.
As a result, many M&As contain a large amount of sensitive data that can be affected by regulatory concerns and legal issues. This is particularly relevant for M&As involving highly-regulated industries such as finance or healthcare. In these situations, the parties may need to conduct a second review of compliance with regulatory requirements as part of the due diligence process.
Before closing, the buyer must be aware of the amount and type of risk involved with the transaction. This includes any sectoral regulations like the Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act or even consumer privacy laws such as the California Consumer Privacy Act. It is important to speak with webdataroomcenter.net/an-efficient-board-meeting-agenda-template-for-nonprofits the personnel of the target company who are responsible for privacy and data security to obtain a clear understanding of their current status, which includes an examination of any policies and procedures that could be problematic in an M&A scenario.
Therefore, it’s important to include forward-looking covenants in the sale contract, which oblige sellers to improve their data protection practices pre-closing. This will not only ensure compliance with applicable law, but also reduce post-closing liability and mitigate the impact M&A activity has on future data breaches.