When a business is acquiring another company, it is critical that due diligence is completed to the highest possible level. Without the proper due diligence, companies risk the security of the data that they hold and the future of their company. Severe security risks might not be immediately obvious, so due diligence is needed to uncover these. Here, we are going to talk you through 5 steps to ensure transitional due diligence has been completed.
Act Before Closing
Closing a deal can be complicated, and there is a lot to think about, but one thing you need to make sure to do is look at the cybersecurity. For the transition to go smoothly, and for any issues to be uncovered both sides should have the security teams provide details to each other. Make sure not to close the deal before this due diligence has been completed.
Conduct A Risk Assessment
The next step in ensuring that due diligence has been completed is to conduct an extensive risk assessment of the company. You need to know precisely how the data is managed and how any sort of compliance laws are maintained. You need to be aware of the potential risks that the company faces, and without a proper risk assessment, you won’t have done thorough due diligence. If you are struggling with assessing the potential risk and the gaps in your security, then take advantage of Vendor Risk Management Cybersecurity program which will identify and better manage supply chain risk.
Work On Your Strategies
Now that you know where the issues lie in your company or the third-party involved, you need to work on your strategies. This includes making a plan to manage your data correctly in compliance with any laws, for example, GDPR as well as improving your incident response strategies. You also need to be ready to combat any security risks, and it is vital that you are proactive about this rather than reactive.
The next step to making sure that due diligence has been completed is to create a communications plan and communicate it effectively to your team and stakeholders. If a breach were to happen, you are allowed 72 hours to prepare your communications and responses thanks to US law. It is still a good idea to have a strategy in place for how you will communicate the breach to your clients so consider this carefully.
Our final tip for making sure that you have completed effective transitional due diligence is to work on this continuously. You cannot just stop finding these issues once the deal has been closed, as new security risks are popping up all of the time. Think about how you will continue to work on this and make sure that the company that you work for is protected against any sort of security attacks that you can.
Follow these steps to ensure transitional due diligence has been completed for your company.