Hi Reader

As you stand on the brink of acquiring a new business, the checklist of due diligence items can seem endless. Yet, there's one area that could make or break your investment: cybersecurity. In an era where digital threats loom large, understanding the cybersecurity landscape of your target company is not just advisable; it's essential.

I'm definitely no cybersecurity expert, so today I'm excited to share some wisdom from my friend and colleague Josh Moulin, founder of Natsar, a cybersecurity consulting and advisory firm. I've known Josh for over a decade now every since the days when we worked together on cybercrime training (in my past life as a prosecutor) and I can attest to the fact that his depth of knowledge in cybersecurityconsulting is second to none.

Here's what Josh has to say about cybersecurity considerations for M&A deals.

If you are considering buying a business, you're likely focusing on financials, legal matters, and operational due diligence. But have you considered the cybersecurity risks? In today's world, failing to assess a company’s cyber hygiene could leave you with unexpected liabilities that can disrupt or devalue your investment.

In this article, I’ll walk you through key cybersecurity considerations that every buyer should keep in mind during the acquisition process. Whether you're purchasing a small online retailer or a service-based company, understanding these risks can save you headaches down the road.

Cybersecurity Due Diligence

Before closing a deal, you should conduct thorough cybersecurity due diligence. Just as you'd inspect financial records or legal contracts, assessing a company's current security posture is critical. Look at their policies, procedures, systems, and previous audits to see if they have protections in place against common threats like ransomware, phishing, and data breaches.

One way to ensure you're evaluating the right aspects is by aligning your review with established frameworks, such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) or the Center for Internet Security (CIS) Critical Security Controls. These frameworks provide a structured approach to evaluating the maturity of a company’s cybersecurity practices, from identifying risks to responding to incidents.

Ask questions such as:

● Have you experienced any cybersecurity incidents or data breaches in the past, and how were they handled?

● What cybersecurity frameworks or standards (e.g., NIST CSF, CIS Controls) does your organization follow, and how compliant are you with them?

● What security measures are in place to protect customer data, intellectual property, and sensitive information?

● What cybersecurity policies and procedures do you have in place for employees, contractors, and third-party vendors?

● How frequently do you conduct vulnerability assessments, audits, or penetration testing, and what were the results of your most recent evaluation?

● Who is responsible for cyber incident response? Do they have an incident response plan?

This is not just about avoiding operational disruptions—it’s about protecting the company's intellectual property, customer data, and future growth potential.

Liabilities from Previous Cyber Incidents

One of the biggest risks for new business owners is inheriting liabilities from prior cybersecurity incidents. Even if the seller hasn’t mentioned it upfront, there could be a history of security breaches, data loss, or unresolved vulnerabilities. These can come back to haunt you in the form of fines, lawsuits, or reputational damage.

It’s essential to have an expert conduct a careful review of any past incidents and understand how they were handled. Was data exposed? Did the company notify affected parties? Were the necessary steps taken to prevent future breaches? These answers should inform your decision-making process.

Note that according to IBM’s annual report on the cost of data breaches, in 2024, the average global cost to remediate a data breach reached $4.8 million, the highest in history. In fact, the cost to remediate a breach could very well exceed the entire price of the business you’re considering purchasing.

Integration Challenges

If you're acquiring a business that will be integrated into your current operations, cybersecurity should be a top priority in the integration plan. Poorly planned mergers often lead to misconfigurations, which can expose both companies to new risks.

For example, combining networks without proper security measures can lead to gaps where attackers can exploit weaknesses. Ensure that there is a solid plan for merging IT infrastructures, updating access controls, and implementing unified security protocols. Failure to do this could mean that an attacker finds a way into your new or existing systems.

Regulatory and Compliance Risks

Depending on the industry, there may be strict cybersecurity regulations that the acquired business must comply with. Non-compliance can lead to significant fines or penalties, particularly in sectors like healthcare, finance, or critical infrastructure, where data privacy and security are heavily regulated.

When evaluating a company, leverage an expert to ensure that they meet all relevant cybersecurity compliance standards, such as HIPAA, GDPR, or PCI DSS, if applicable. Even if they’ve been compliant in the past, you’ll want to ensure that all ongoing processes and systems will continue to meet regulatory requirements post-acquisition.

Post-Acquisition Cybersecurity Strategy

After the deal closes, cybersecurity should remain front and center. One of the most important steps you can take is to establish a comprehensive post-acquisition cybersecurity strategy. This plan should include:

● Immediate risk assessments of the entire IT infrastructure

● Alignment to a recognized framework such as the NIST CSF or CIS Controls and a gap analysis and roadmap to implement necessary security improvements

● Updated policies and training for employees, including those from the acquired company

● Monitoring systems for any signs of intrusion or compromise

Taking proactive steps in the early days of ownership will minimize risks and ensure the smooth integration of the new company.

Final Thoughts

Cybersecurity isn't just a technical issue—it's a business issue. Ignoring it during an acquisition could result in unforeseen costs, legal issues, or reputational harm. By incorporating cybersecurity into your due diligence and post-acquisition strategies, you'll safeguard your investment and set the stage for long-term success.

If you're looking for expert guidance in navigating cybersecurity during the acquisition process, my company, Natsar, specializes in helping businesses identify and address cyber risks. From conducting in-depth cybersecurity assessments to aligning with frameworks like NIST CSF and CIS Controls, we provide tailored solutions to ensure your acquisition is secure from the start.

Whether you're in the initial stages of due diligence or need help integrating cybersecurity after the deal closes, Natsar is here to assist. Contact me today through my website or directly via email to learn how I can support your next acquisition and protect your investment. Let's work together to ensure your next deal is a success—without the cyber risks.

Happy deal hunting!

About the Guest Author

​Josh Moulin has over two decades of experience in cybersecurity, having held senior leadership roles across government and private sectors. He is the founder and principal of Natsar, a cybersecurity consulting and advisory firm. His past roles include Senior VP of Operations at the Center for Internet Security (CIS), commander of an FBI cybercrimes task force, CIO and CISO for a national security program within the U.S. nuclear weapons enterprise, and Executive Partner at Gartner. Josh holds a Master’s in Information Security Assurance and numerous industry certifications, and is recognized globally for his expertise in cybersecurity, risk management, and leadership.

​