Why Data Loss Prevention strategy is core to successful M&A

Isaac Madan
October 4, 2022
Why Data Loss Prevention strategy is core to successful M&AWhy Data Loss Prevention strategy is core to successful M&A
Isaac Madan
October 4, 2022
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When two companies merge, there is typically a lot of data that needs to be transferred between the two organizations. This data may include confidential information such as customer records, financial reports, and employee data. If this data falls into the wrong hands, it could be used to commit fraud or theft. That's where data loss prevention (DLP) comes in.

DLP is a set of tools and processes that helps organizations prevent the unauthorized disclosure of confidential information. It can be used to monitor and control the flow of data within an organization, as well as to protect data at rest and in transit. In the context of mergers and acquisitions, DLP can help ensure that only authorized personnel have access to sensitive data, and that this data is not accidentally or deliberately leaked.

There are several steps that companies can take to use DLP in the context of mergers and acquisitions:

  1. Perform a risk assessment: Before anything else, it's important to understand what types of data will be involved in the merger or acquisition, and what the risks are if this data falls into the wrong hands. This will help you determine which DLP measures are most appropriate for your organization.
  2. Identify critical data: Once you know what type of data will be involved, you need to identify which pieces of information are most critical to your organization. This will help you prioritize which data needs to be protected.
  3. Implement a DLP solution: There are a variety of DLP solutions available on the market, ranging from simple software applications to more comprehensive hardware appliances. With most companies having a variety of cloud applications, it is best to focus on a cloud native application to aid ease of deployment and to allow for the historical scanning of information.
  4. Educate employees: Employees should be aware of your organization's data security policies before the merger or acquisition takes place. Make sure they know what types of data are considered sensitive, but may be unsure how they should handle this information throughout the transition process.
  5. Monitor activity: Even with DLP measures in place, it's important to monitor activity for signs of unauthorized access or disclosure of sensitive information. Be sure to review logs on a regular basis and investigate any unusual activity immediately.

Another important aspect of DLP is ensuring compliance with industry regulations. When two companies merge, they may be subject to different regulations depending on their respective industries. For example, a fintech firm that merges with a healthcare company would need to comply with both HIPAA and FINRA regulations. A good DLP solution will be able to help you ensure compliance with all relevant regulations, even if they change after the merger takes place.  

Ultimately, data loss prevention is an important consideration for any organization undergoing a transaction. It helps limit the sharing of potentially sensitive information to 3rd parties involved in an M&A transaction (deal rooms, auditors, etc.) by identifying and proactively removing data that should not be disclosed. By taking steps to identify critical data and implement appropriate DLP measures, you can help protect your organization's confidential information from accidental or deliberate leaks.

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