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An important post from US law firm Womble Bond Dickinson (US) LLP, which could have implications for the Private Equity industry and cybersecurity.
A case that is progressing through California courts following a data breach at a Bain Capital subsidiary, PowerSchool, indicates that PE firms may be held liable for cybersecurity failures at portfolio companies. In this case, the Southern District of California named both PowerSchool and its parent company, Bain, as defendants.
The case has implications for acquisitions, in that acquirers should understand all liabilities, including cybersecurity practices and threats they are taking on, when making a purchase.
1. Be careful of disclaimers.
2. Cybersecurity is a material M&A risk.
3. Legal and regulatory implications go beyond Reps and Warranties.
4. Close out a deal before taking control and be aware of full material risks.
PE firms that build out their portfolios could find themselves in court if any one of their portfolio companies is breached.
@Parava Security Solutions
#cybersecurity #MandA
https://lnkd.in/evxRMPBR
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