Mergers and acquisitions take place every day (there were 2,183 globally in 2017 alone) with a market value of $3.7 trillion in 2017.
The M&A process is a vulnerable time for all parties involved – did you know that between 70 and 90 percent of M&A’s fail? Just think how much more the market would be worth if there had been more successful deals to report!
There are lots of reasons why a merger or an acquisition fails.
There are external factors, like industry changes or shifts in national and global politics. Then there are business reasons, perhaps the target business doesn’t want to be acquired, or the two companies planning to merge find that they have significant cultural differences.
Then there’s data security. Recent market research states that 48% of respondents believed that bidders would reduce the valuation of a target company by upto 20% as a result of a data breach and 19% were likely to walk away from the deal completely. You only need to look at what happened when Yahoo disclosed two major data breaches during takeover talks with Verizon. Verizon were able to negotiate a revised deal of $350 million less than their original offer.
The risk of data leaks
When a merger or acquisition deal is in progress, information needs to be shared with a complex web of c-suite stakeholders. These executives are often highly mobile and need a quick and convenient way to share data. They may reply to sensitive emails on their phones, or carry around confidential documents and emails stored on their laptops – you can see the problem here, how is this secure?
What would happen if the executive left their laptop on a train? Or lost their mobile phone? What if they send that M&A email to a journalist or some other unauthorized person instead of the board member with the same name? Or a disgruntled employee decided to take the confidential data to a competitor or make it known to the counterparty in the M&A process?
It’s vital that executives keep in touch with the M&A process while on the move, but without a concerted focus on security, sensitive information can easily end up in the wrong hands – this can result in leaks that can cause businesses to abandon M&A deals (for example, a data leak played a significant role in the failed Kraft – Unilever deal).
A focus on security
Data security doesn’t have to be complex.
Rather than send content out to various recipients (who could then keep a copy of the content, or even send it on again to any other party) businesses can ‘push’ the content out to authorised people instead.
As part of our work during a FTSE 100 merger process, Pushfor helped the business keep global executives updated with the latest news, while ensuring the content was secure. There were thousands of equity stakeholders, residing in several geographies across the globe, who needed to be kept in the loop, but only about parts of the process relevant to their profile. Using Pushfor, our client was able to give each executive access to the specific information they needed to know, and no more.
The ‘Pushed’ content remained “secure by design” within the central office. Executives couldn’t download, share or screenshot the content that they viewed, and the content could only be viewed on the recipient’s device – try and take a screenshot, and your access would be revoked and the content owner informed of the screenshot attempt.
Of course, collaboration is vital to the M&A process, so Pushfor provided a secure messaging function that allowed executives to safely discuss what they were reading.
At the end of this project, the client was able to view a full audit trail of all interactions that people had with the disseminated content. The merger was successful and leak-free; this was aided not just by using a secure communications platform, but one that was flexible enough to adapt to the client’s needs, making the merger significantly more efficient.
Businesses need to protect themselves both from accidental and willful data leaks. The M&A process is a delicate one, and no one can predict whether a leak will lead to one or both businesses abandoning the process, potentially wasting money and hitting their share value in the process.
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