While M&A deals webdataroomcenter.net/an-efficient-board-meeting-agenda-template-for-nonprofits can bring value to the assets of a company, they also expose it risk. Businesses that fail to comply with M&A transactions to safeguard their data can face costly fines and also lose trust in digital technology. A well-planned, implemented privacy due diligence plan can reduce the risk.
This is why many M&As involve a significant amount of sensitive data that can be impacted by regulatory issues and legal issues. This is particularly relevant to M&As that involve highly-regulated industries such as healthcare or finance. In these situations, parties may be required conduct a separate audit of regulatory compliance as part of the due diligence process.
Whether the data of the target is subject to regulations specific to the sector like the Gramm-Leach-Bliley Act or the Health Insurance Portability and Accountability Act, or even general consumer privacy laws, such as the California Consumer Privacy Act, prospective buyers must know the degree of compliance and risk involved in the transaction before closing. Interviewing the personnel of the target responsible for security and privacy is crucial to get a true picture of their situation, which includes any policies or procedures that could be problematic in an M&A scenario.
As a result, it’s imperative to include forward-looking provisions in the sale contract that will require sellers to enhance their data security practices prior to closing. This will not only ensure compliance with the law applicable to them but also limit post-closing liability and mitigate the impact M&A activities have on future data breaches.