What AI Can Tell You About M&A Risk

January 30, 2024
Vectra AI
What AI Can Tell You About M&A Risk

Is your firm considering M&A activity this year? 

If so, you’ll have plenty of company. Last year saw a rise in M&A activity due to an increasingly Darwinian economic landscape marked by high inflation, rising interest rates, labor shortages, and supply chain disruptions. Analysts expect those trends to continue in 2024, affirming the adage that companies must either grow or die, acquire or be acquired. 

That’s why your firm–and quite possibly your competitors–are likely considering M&A activity this year. Fortunately, artificial intelligence (AI) can play a huge and beneficial role in key areas of the M&A process. Not only can AI help identify top M&A prospects for your firm but most critically, it can assess and resolve security risks for both your firm and any potential target companies that may arise during and after the M&A process.

Is Your Firm’s Security Posture Ready for an M&A Event?

As a CISO, it’s your job to manage risk. But even though your company may be well-positioned for a successful M&A event from a business perspective, your security may not be as well-positioned as you might think it is. There are several areas of risk inside and outside of IT to be aware of that can impact your security readiness and data security. 

Behavioral Risk Rises with M&As

One is the potential for insider threats from M&A-related job cuts. Retribution is a common motivation for employee sabotage that can cause tremendous damage to their former company and the M&A process. Another is the temptation for executives to bypass data security measures in their drive to move the M&A process forward and minimize business and revenue disruptions.

These are just a couple of reasons why your organization’s risk tolerance is at its lowest during the M&A process. New events, disrupted routines, data sharing, and other behavioral changes just come with the territory. However, defending against these risks is ultimately your responsibility.

That’s why proactively monitoring behaviors and assessing the security integrity across all channels before the M&A begins or at least as early in the process as possible, is a smart way to start.

Manage Risk from Both Sides Early in the Process

Of course, there are two sides to every M&A deal, and that means there are potential risks from the target company that you’re merging with or acquiring.

Should you expect to see the same level of rigor and similar security protocols in the target company’s security that you apply to your own? 

Ideally, yes; but realistically, no. And because you’re dealing with security unknowns, you’ll likely need considerable time to identify and resolve any vulnerabilities that may be present. 

That’s why you, as the CISO, need to be brought into the deal as early as possible. But even if you’re part of the process from the very beginning, you may face labor-intensive, comprehensive due diligence and remediation tasks, as well as conflicting security practices and/or technology stacks that will have to be reconciled. 

A wise approach begins by taking a close look at what you can control–your own firm’s security posture. For example, what potential risks or vulnerabilities does your side bring to the deal? Does your security stack deliver the coverage that you want to see in the target company’s security posture?

More to the point, is your hybrid and multi-cloud environment monitored and protected every hour of every day, across the globe? Is theirs? Does your security stack–or the target team’s–let you:

  • Identify attackers hiding in the hybrid network
  • Deliver automated signal clarity across channels
  • Immediately notify you when Azure AD accounts have been compromised

There are other risk categories to assess, of course, but the point is that ensuring data security in a hybrid threat environment under the best of circumstances is a layered and complex undertaking. Doing so during the M&A process can be an even more stressful experience. The earlier you’re included, the safer and smoother the M&A process will be. On the flip side, the later you’re brought into the deal, the more pressure and less time you’ll have to get it right. 

Pursue M&A Activity with the Power of Vectra AI-Driven Security

Fortunately, an AI-driven approach to risk assessment can not only quickly and easily identify unseen risks and hidden vulnerabilities in your environment, but can also rapidly assist in resolving them by recommending and even executing the appropriate measures. 

Vectra AI is the industry’s only platform powered by advanced Attack Signal Intelligence™ (ASI), delivering unrivaled signal clarity and threat detection, investigation, and remediation even in unfamiliar, target company environments. Plus, you gain quick and accurate threat analytics, triage, and prioritization capabilities in just minutes. And when it’s time for ecosystem integration, ASI streamlines the process by automatically correlating and contextualizing system alerts and signals, analyst workflows, and response controls.

Minimize the Grunt Work of M&A Due Diligence 

Vectra’s AI-driven analytics can also help maximize your time for analysis and the very important human interaction aspect of M&A by handling time-consuming tasks such as:

  • Omni-channel data gathering and analysis
  • Harmonizing security technology stacks
  • Reconciling conflicting security practices
  • Identifying out-of-date SOC protocols 

Establish a Comprehensive Data Room

The Vectra platform can help you establish a highly effective data room for a granular view of target company risks:

  • Analyze and apply any existing general assessment guidelines
  • Generate an efficient method for data gathering and reporting 
  • Capture and streamline information, data, and procedures
  • Conduct risk analysis on third-party contracts 
  • Assess system engineering or infrastructure stacks, supply chains of services, and product dependencies 

If your firm is considering M&A activity, keep the process secure and smooth with Vectra AI-driven security. To learn more about how to apply the power of AI in your M&A process for optimum results, check out our CISO’s M&A Risk Checklist.