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There have been a few notable cyber related examples where investors have been let down. The Verizon acquisition of Yahoo wrote the deal down by $350Mn, due to the Yahoo data leak. Marriott’s shareholders face a potential ICO fine of £99Mn, following its acquisition of the Starwoods.
Rightly the acquisition process has to consider the risk of cyber. But there are some short term issues. There is not enough skilled cyber security resource in the market place, to be able to conduct cyber due diligence (DD). The market in general is facing a shortfall of over 1Mn resources. Corporate due diligence is complex, cyber security in complex.
Placing any meaningful assurance on cyber security is going to require more than a questionnaire. It will need in depth testing to place assurance over the security of the business. If the issues in Starwood were found, the deal may have been stopped, or at least the issues remediated and reported. Which could impact the acquisition price and generate regulatory fines.
The moral of the story is get your security sorted beforehand. Iit will support the future sale of the business. It may stop a deal at the DD stage if not. Or as Marriott shareholders now understand result in a potential ICO fine.
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