M&A can boost the value of a business However, they could also expose them to significant risks. Businesses that fail to secure information in M&A deals can face expensive penalties and lose trust in the digital realm. A well-planned, properly implemented privacy due diligence plan can reduce the risk.

Many M&As are marked by the presence of sensitive data that could be affected by regulatory and legal issues. This is particularly relevant for M&As which involve highly-regulated sectors such as finance or healthcare. In these cases, the parties might be required to conduct a separate audit of regulatory compliance as part of the due diligence process.

Whether the target’s data is subject to specific regulations such as the Gramm-Leach-Bliley Act or the Health Insurance Portability and Accountability Act or general consumer privacy laws like the California Consumer Privacy Act, prospective buyers need to know the level of compliance and risk pop over to this site in the transaction prior closing. It is essential to speak with the employees of the target who are accountable for data security and privacy to get a clear picture of their status, including the policies and procedures that could pose a problem in an M&A scenario.

Therefore, it’s essential to include forward-looking covenants in the sale contract that will require sellers to enhance their data protection practices pre-closing. This will not only help ensure compliance with applicable laws, but it’s also an excellent method to decrease liabilities after closing and reduce the impact of M&A activity on the possibility of data breaches in the future.

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