In today’s connected operations environment, a breach at your acquisition target could become your liability the day the deal closes.
Cybersecurity may not be the first thing that comes to mind when evaluating a glass fabricator or a kiln materials processor. But post-close attacks—from ransomware in ERP systems to supplier data theft—are real, and increasingly frequent. Pre-M&A cybersecurity audits are no longer optional in materials-sector deals. They’re fundamental risk management.
Here’s why cybersecurity due diligence must be part of every industrial M&A checklist.
1. Most Mid-Market Targets Lack Formal Cyber Protocols
Many materials companies—especially family-owned or regional operators—still run:
Outdated ERP systems without two-factor authentication
Shared login credentials across departments
Unencrypted customer and vendor data
A post-close data breach could compromise contracts, specs, and customer trust—while exposing the buyer to legal liability.
2. Legacy Systems Can Create Vulnerabilities at Scale
Once integrated into a larger platform, a legacy system becomes a potential back door into the broader enterprise.
Consider:
Outdated Windows servers running shipping software
Insecure VPN tunnels for field service crew log-ins
Unpatched SCADA systems on kilns or batching stations
What looked like a minor ops issue becomes a vector for business-wide disruption.
3. Customer and Vendor Data Exposure Carries Legal and Reputational Risk
A compromised server may expose:
Spec sheets with proprietary dimensions
Vendor pricing and rebate data
Confidential project files tied to major infrastructure clients
Even if the breach occurred pre-close, legal and reputational fallout lands on the new owner.
4. Regulatory and Contractual Compliance May Be Jeopardized
If the target operates in regulated industries—like aerospace, energy, or defense—cyber lapses can trigger:
Disqualification from RFPs
Contract termination
Vendor blacklisting
Your cyber due diligence should verify compliance with industry frameworks (e.g., NIST, ISO 27001) where applicable.
5. Insurance Coverage Gaps Are Common
Many sellers claim to have cyber insurance, but:
Coverage limits may be outdated
Exclusions may prevent claim payouts
Notification protocols may be unclear
Always review the seller’s cyber policy, breach history, and incident response plan during diligence.
6. Build Cyber Reviews Into LOI and Diligence Timelines
Your IT audit should include:
Network architecture mapping
Penetration testing or vulnerability scans
Review of employee access policies and MFA use
Make remediation of high-risk gaps a pre-close requirement.
: Cyber Due Diligence Isn’t Just for Tech Deals—It’s for Smart Deals
In a connected industrial environment, every acquisition carries cyber risk. Audit early, document everything, and invest in cleanup before—not after—you inherit the exposure.
