Ensuring Cybersecurity Protections During MSP Mergers and Acquisitions in 2024

In 2024, the MSP business merger and acquisition landscape is heating up, with companies looking to expand and grow through strategic deals. However, amidst the excitement of M&A negotiations, cybersecurity must not be overlooked. As companies come together, they may inadvertently let their defenses down, leaving themselves vulnerable to cyberattacks such as phishing and DDoS attacks.

According to research from Morgan Stanley, M&A activity is expected to rebound in 2024, with a 50% rise in volumes compared to 2023. This increase in activity spans across various market segments, including technology, banks, energy, healthcare, hotels, and real estate. With this surge in M&A deals, cybersecurity becomes even more critical for companies involved in these transactions.

MSPs, in particular, face unique risks during M&A discussions as they provide essential services to their customers. Tim Weber, vice president of channel growth at Cyber74, emphasized the importance of assessing the security posture of an organization being acquired. He highlighted the need for a thorough security risk assessment to address potential vulnerabilities and risks during the integration process.

Michael Crean, VP of managed security services at SonicWall, shared his insights on the cybersecurity challenges faced during MSP M&A activities. He stressed the importance of asking critical questions regarding patch management, multifactor authentication, and administrative access to ensure basic cybersecurity hygiene is maintained throughout the deal.

As companies navigate through M&A talks, it is crucial for buyers to understand the cyber risk profile of the seller. George Sierchio, an EVP and senior partner at Cogent Growth Partners, LLC, emphasized the need for open discussions about cybersecurity issues post-letter of intent. Buyers must assess the cybersecurity practices, regulatory compliance, and insurance coverage of the selling company to mitigate risks during integration.

In conclusion, as MSP business merger and acquisition activity intensifies in 2024, companies must prioritize cybersecurity to safeguard their operations and protect their customers. By implementing robust cybersecurity measures and conducting thorough due diligence, companies can navigate through M&A deals successfully while minimizing cybersecurity risks.