Securing the Deal: Cyber Risk and Resilience in M&A

Mergers and acquisitions (M&A) remain one of the fastest ways to grow, diversify, or reposition a business. They can unlock market share, accelerate technology adoption, and create immediate competitive advantage. Yet despite the promise, history shows that many transactions fall short of expectations. Some deals collapse entirely, while others close but deliver disappointing outcomes.
The causes are often not financial miscalculations, but rather hidden risks—legal exposures, operational weaknesses, or increasingly, cybersecurity liabilities. A failure to identify and mitigate these early can turn what looked like a high-value acquisition into a costly liability.
Today, rigorous assessment—spanning financial, legal, operational, and especially cybersecurity—has become a cornerstone of successful acquisitions. Done thoroughly, it reduces uncertainty, improves valuations, and enables smoother integration post-close.
Why Rigorous Assessment Matters
Pre-acquisition due diligence has long been about more than just financial checks. Buyers expect a holistic picture of the target organisation.
- Financial diligence: multi-year analysis of accounts, tax positions, debt structures, and future growth projections.
- Operational diligence: assessments of production capacity, supply chains, vendor dependencies, and continuity planning.
- Legal diligence: review of contracts, intellectual property rights, litigation, employment obligations, and regulatory compliance.
- Technology diligence: for technology companies in particular, scrutiny must extend deeper—to secure software development lifecycle (SSDLC) practices, open-source licence compliance, and security architecture design.
Post-acquisition, diligence must not stop. Closing a deal often introduces new complexity. Integration of systems and cultures exposes fresh vulnerabilities. Regular, independent assessments provide objective assurance that risks are managed, and they create a mechanism for continuous improvement across the merged business.
- Board-level assurance: transparent reporting provides directors with confidence that the integration is proceeding safely.
- Internal control reviews: gaps in governance, reporting lines, or key talent are quickly identified and addressed.
- Cyber resilience testing: the organisation’s ability to withstand and recover from attacks is validated under real conditions.
- Continuous monitoring: post-acquisition checks ensure issues do not accumulate unnoticed, threatening long-term value.
The Cybersecurity Dimension
Cybersecurity has moved from being a “specialist” due diligence stream to a deal-defining variable. Poor cyber hygiene, undisclosed breaches, or architectural flaws can directly impact valuation, investor confidence, and regulatory exposure.
A critical part of this assessment is understanding the cybersecurity maturity of both the target’s posture and its overall programme. This involves benchmarking how advanced and resilient the organisation is compared to industry standards, but just as importantly, assessing how it stacks up against the maturity, risk posture, and expectations of the acquiring business.
Before acquisition, buyers should seek to:
- Rate cybersecurity maturity: using frameworks such as NIST CSF V2, or ISO 27001, to score the target’s security posture and programme discipline. A low rating signals greater risk and potentially higher integration costs.
- Assess framework compliance: Does the target meet regulatory and industry requirements such as SOC2, CMMC, PCI-DSS or DORA? And are the certifications current.
- Review incident history: How many breaches have occurred? Were they disclosed, contained, or underreported?
- Evaluate resilience: Can critical systems withstand attack or recover quickly after disruption?
- Run discovery scans across the estate: to obtain a true view of what systems, assets, and applications are actually in use, rather than relying solely on documentation.
For high-value deals, acquirers often commission compromise assessments or red team exercises to reveal hidden attacker presence or undisclosed vulnerabilities. For technology-heavy firms, additional focus on SSDLC practices, open-source licence governance, and the robustness of system and security architecture is non-negotiable.
Post-acquisition, maturity ratings provide a baseline for measuring progress over time. They guide investment decisions, ensure accountability, and help boards track the uplift in resilience that integration should deliver.
Emerging Risks to Manage
Beyond technical systems, there are people- and process-driven risks that, if ignored, can compromise even the best-planned deal.
- Supply chain exposure: Mergers often inherit sprawling third-party relationships. Without visibility, acquirers risk adopting vendors with weak security controls, creating hidden attack paths into the core business.
- Disgruntled employees: Uncertainty during acquisition can lead to disaffected staff, insider threats, or even deliberate sabotage. Background checks, enhanced monitoring, and clear communication reduce these risks.
- Data privacy obligations: Acquirers may inherit compliance risks under GDPR, CCPA, DORA, or other regimes. Mishandled customer data, poor consent management, or opaque data flows can bring regulatory fines and reputational harm.
These areas demand the same rigour as financial or operational checks. Neglecting them can undermine even the most carefully structured acquisition.
Embedding Security in the SPA
One of the most effective ways to manage cyber risk in M&A is to embed security requirements directly into the Share Purchase Agreement (SPA). These act as contractual guardrails, obligating the seller to disclose and remediate material cyber risks.
Typical provisions include:
- Disclosure requirements: full reporting of breaches, incidents, or ongoing vulnerabilities.
- Warranties and indemnities: assurances that the target complies with specific frameworks (including DORA for EU financial entities), with financial remedies if not.
- Remediation commitments: obligations to resolve high-risk vulnerabilities prior to completion.
- Licence compliance assurances: explicit confirmation that open-source components are used within licence terms.
By hardwiring cybersecurity into the SPA, buyers not only reduce immediate exposure but also create leverage for ongoing dialogue about risk management post-close.
The People Dimension
While systems, contracts, and controls are vital, it is people who ultimately determine the success or failure of an acquisition. Technology, cyber resilience, and process integration can only work if the teams behind them are engaged, supported, and fairly treated.
Acquisition often creates uncertainty for employees—about their future, their roles, and the culture of the combined entity. Mishandling this transition risks losing critical talent at precisely the moment it is needed most.
- Fair treatment and transparency: staff at the acquired company must be given clarity about their role in the future business, and treated as valued partners rather than liabilities.
- Compliance with employment law: every acquisition must respect the applicable labour and employment laws in the countries concerned. Overlooking this not only risks legal penalties but can also damage trust and morale among employees.
- Resourcing for integration: too often, integration is layered on top of day-to-day work without providing sufficient extra capacity. Ensuring the business can run smoothly while integration proceeds requires additional people and resources.
- Cultural alignment: cyber resilience and security by design succeed when teams share the same values, behaviours, and incentives. Bringing people on the journey builds buy-in.
- Retention of key talent: those who know the systems, the data, and the customers are instrumental in ensuring integration is effective and sustainable.
Ultimately, the people in the acquired business are not simply passengers in the deal—they are the ones who will deliver the success of post-acquisition integration.
Case Examples: When Cyber Risks Change the Deal
Real-world cases show how overlooked cybersecurity can reshape M&A outcomes — often at enormous cost.
- Yahoo & Verizon (2017): During acquisition talks, Yahoo disclosed two major historic breaches that had not been fully revealed earlier. Verizon cut its purchase price by $350 million to $4.48 billion, underscoring how hidden cyber liabilities can instantly erode deal value.
- Marriott & Starwood (2018): After Marriott acquired Starwood Hotels, it discovered a long-running breach in the acquired systems. The incident was initially thought to involve up to 500 million guest records, later revised to an upper limit of around 383 million unique records. Marriott was fined £18.4 million by the UK ICO, highlighting the dangers of inherited cyber liabilities and the importance of thorough post-acquisition assessment.
These examples reinforce a simple truth: cybersecurity risks are not hypothetical — they directly shape valuations, regulatory outcomes, and long-term integration success.
From Risk to Resilience
Forward-looking acquirers see rigorous assessment not just as a protective measure but as a value enabler. Cyber diligence and resilience planning provide clarity, stability, and a foundation for sustained growth.
- Faster realisation of synergies: integrations move quicker when risks are identified early and managed proactively.
- Reduced surprises: fewer shocks post-close, from hidden liabilities to undisclosed breaches.
- Regulatory confidence: demonstrable governance builds trust with regulators and investors.
- Repeatable playbook: acquirers refine their methodology, strengthening each successive transaction.
Here, DORA provides a valuable reference point: it codifies operational resilience expectations for financial services firms in the EU, including ICT risk management, incident reporting, and third-party oversight. For acquirers, aligning integration with DORA not only ensures compliance but also sets a benchmark for resilience that can be adopted globally.
The NuroShift View
In M&A, cybersecurity is no longer a bolt-on consideration. It is a strategic lever that defines the success or failure of the deal. This is especially true for technology-driven acquisitions, where code quality, open-source governance, architecture, resilience, and regulatory alignment with frameworks like DORA can create or destroy billions of dollars in value.
At NuroShift, we combine deep technical expertise with structured methodologies to help clients:
- Uncover hidden risks in software, systems, supply chains, and processes.
- Build cyber resilience across newly merged entities.
- Embed enforceable security requirements into deal structures and SPAs.
- Manage people risk by engaging, retaining, and empowering the workforce.
- Accelerate secure integration that creates lasting value.
In today’s landscape, rigorous assessment before and after acquisition is no longer optional. It is the discipline that safeguards investment, builds trust, and ensures resilient growth.
For more thought leadership articles like this, take a look at our Insights page: https://www.nuroshift.ai/insights
Matt leads security architecture and AI integration at NuroShift. Formerly Global Head of Security Architecture at Visa, he led teams across the US, Europe, and Asia Pacific, and served as a senior voting member of the Global Technology Architecture Review Board. He has led cybersecurity due diligence for acquisitions and overseen technology integration for acquired entities. With over 25 years of experience across payments, trading, banking, and telecoms, Matt is CISSP and CISM certified and a Fellow of the British Computer Society. He’s passionate about developing next-generation cybersecurity talent, a keen reader, and an amateur gardener.