Navigating the Data Minefield: Essential Executive Recommendations for M&A and Divestitures

The U.S. M&A landscape is back in full swing. May witnessed a significant rebound in deal activity, especially for transactions exceeding $100 million, signaling renewed confidence and strategic maneuvers across sectors. While the allure of growth, synergy, and market consolidation drives these deals, the true success often hinges on a factor frequently underestimated in its complexity: data.

Recent conversations with security and data executives involved in these high-stakes transitions consistently reveal a single, resounding truth: a clear, accurate, and holistic understanding of their data environment is the bedrock of a seamless transition. For IT executives, in particular, a merger, acquisition, or divestiture necessitates three critical imperatives:

• Ensuring appropriate data availability for the transformed entity 
• Facilitating the clean split or efficient combination of operational and accounting systems
• Establishing and maintaining robust data governance for all involved parties

But simply naming these imperatives isn't enough. The execution is where companies thrive or stumble. Here are some practical recommendations for leaders to navigate the data minefield and steer your organization safely through these transformational events.

Recommendation 1: Prioritize Data Discovery and Mapping – Early and Comprehensively

The moment a transaction is contemplated, data must become a central part of your due diligence. Don't wait until the deal is signed. Data discovery and mapping are crucial to providing data availability, identifying operational and accounting assets and are a critical step towards establishing robust governance.

• Go Beyond the Surface: It's not enough to know what applications exist. You need to understand the data within them: its type (personal, financial, IP, operational), its sensitivity, its location (on-prem, cloud, SaaS), its ownership, and its purpose.
• Automate Data Discovery: Manual data mapping is prone to error, time-consuming, and can miss critical "dark data." Invest in technologies that can automatically scan, classify, and map data across your entire hybrid IT estate. This provides the holistic understanding your peers swear by.
• Identify "Crown Jewels" and "Toxic Waste": Clearly identify critical intellectual property, regulated personal data, and any data that poses a significant privacy or security risk. Conversely, identify redundant, obsolete, or trivial (ROT) data that needs to be archived or securely deleted.

How Securiti Can Help: Securiti provides robust capabilities to automatically scan and classify data across environments and identify ROT data.  The result is a complete data mapping for the new org.

Recommendation 2: Establish a Dedicated Data Governance Transition Team

Data governance cannot be an afterthought or a side project for an already stretched IT team.

• Cross-Functional Leadership: Form a dedicated team comprising representatives from IT, Legal, Compliance, Cybersecurity, HR, and relevant business units. This ensures a holistic perspective on data ownership, privacy, security, and operational needs.
• Define Clear Roles & Responsibilities: For every data set identified, clearly assign ownership and responsibilities for its transfer, retention, and ultimate disposition. Who decides what moves? Who ensures compliance? Who verifies deletion?
• Develop a Unified Data Policy Framework: Before, during, and after the transaction, ensure that data policies (e.g., retention, access, privacy, security) are aligned and consistently applied across all relevant systems and entities. This is particularly crucial when merging different corporate cultures and compliance postures.

How Securiti Can Help: Securiti’s Data Command Graph shows the relationships between data elements that can help identify toxic combinations of risk. Risk can accumulate where sensitive data, access issues, security configuration and AI patterns usage converge, for example.  Securiti helps to identify and write sophisticated policies for subsets of data to control risk.

Recommendation 3: Implement Granular Access Controls from Day One

Access management is a primary cybersecurity concern during any organizational change, and M&A is no exception.

• "Least Privilege" as a Mantra: During the transition, resist the urge to grant broad access for convenience. Ensure that users (employees, contractors, third parties) only have access to the data absolutely necessary for their role, especially as roles change or new entities are formed.
• Automated Access Reviews: Leverage tools that can regularly review and revoke unnecessary access rights. Manual processes are simply too slow and error-prone during rapid organizational shifts.
• Identity-Centric Security: Focus on the identity of the user, not just the network perimeter. Implement multi-factor authentication (MFA) and adaptive access controls across all systems to secure access to sensitive data, particularly for transitioning personnel.

How Securiti Can Help: Securiti AI enhances data access controls through data access intelligence, continuously analyzing who is accessing what data and why. This intelligence then allows for the file-level enforcement of policies, ensuring that specific access rules are applied precisely to individual files, preventing unauthorized exposure and maintaining strict data governance.

Recommendation 4: Prioritize Data Minimization and Secure Deletion

In divestitures, what you leave behind or don't transfer correctly is as important as what you do.

• "Need to Transfer" vs. "Nice to Have": Be ruthless in determining what data must be transferred to the new entity. Avoid transferring unnecessary historical data that could become a liability for the divested company.
• Verifiable Deletion: For data that is not transferred to the divested entity and is no longer needed by the parent company (or vice versa), ensure it is securely and verifiably deleted from all systems and backups. This is critical for data minimization and reducing the attack surface.
• Data Retention Policies: Re-evaluate and enforce data retention policies for all datasets post-transaction. Holding onto data past its legal or business necessity incurs storage costs and increases breach risk.

How Securit Can Help: Securiti helps with ROT (Redundant, Obsolete, Trivial) data minimization by automating the discovery, classification, and remediation of such data across environments. This process reduces storage costs, enhances security by minimizing the attack surface, and improves the quality of data assets.

Recommendation 5: Build in Proactive Breach Response & Auditability

The transactional period introduces heightened risk. Be prepared.

• Scenario Planning: Develop and rehearse data breach response plans specifically tailored to the unique complexities of a merger or divestiture. Who is responsible for notification if data is breached from a commingled system?
• Maintain Comprehensive Audit Trails: Ensure all data access, modification, and transfer activities are meticulously logged. This is invaluable for forensic analysis in the event of an incident and crucial for demonstrating regulatory compliance.
• Third-Party Risk Management: Review and update Business Associate Agreements (BAAs) and other vendor contracts to reflect new data processing relationships or ownership. Ensure third-party vendors also adhere to robust data security standards.