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Cyber DD should quite rightly be part of any M&A process, Yahoo and Marriott are 2 good example of why. Cyber DD should also form part of the loans evaluation process, used to assess the credit risk of clients. As making corporate loans poses similar risks to M&A, with an indirect impact on shareholder value should things go wrong.
I’ve been involved in a several syndicated loans, upto $500mn, where we felt it necessary to complete assessments of cyber security. Providing a $100Mn line on Monday, to then find a cyber attack has ransomed the IP and shut down supply on Wednesday, poses a credit risk.
The assessment processes are similar for both M&A and credit risk. But for both cases, unless you run in depth Pen-testing and tech audits, issues are not always visible and it’s not always in the interest of the seller to have them visible. It also takes a brave advisor to put their hand up and stop a deal in flight. But market sentiment is changing.
Buyer beware is a good position to take.
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