Published By : 26 Jun 2017 | Published By : QYRESEARCH
Technology is evolving rapidly, and now fortunes are mostly in digital numbers rather than hard cash. While this paradigm shift serve numerous benefits, hacking or cyber-security has quickly turned into a glaring problem, more so far the banking sector. Recent WannaCry ransom attack has fueled the awareness among the bankers and in the near future, deal-vetting with the help of cyber-security experts is expected to continue as a major trend.
Mergers and Acquisition Decisions Made Safer
Similar to how good bacteria are used to eliminate disease-causing bacteria in healthcare, the banking sector are taking help from computer geeks to protect against the bad geeks. These cyber-security experts add another layer of scrutiny by examining targets for potential risks. In the recent times, providers such as Intralinks Holdings Inc. and consultants such as Deloitte LLP have resorted to these experts to eliminate the probabilities of buying an empty shell, exposing sensitive customer data, or overpaying for a target whose patents have been copycatted or spied on.
This growing demand for cyber-security experts is not about getting technical, but the business impact and ultimate valuation, particularly during M&A decisions.
High-profile Data Breach Significantly Lowers Deal Valuation
One of the instance of exposed deal was the acquisition of Yahoo Inc. in 2014 by Verizon Communications Inc., wherein the hack affected nearly 500 million user accounts and the offer was reduced by US$350 mn. The growing concern that computer viruses remain rampant until the deal is closed, leaving the acquirer open to stolen customer demand, ransom demands, and exposing industrial secrets.
The clue from Yahoo and WannaCry instances have been noted. A survey by the NYSE highlighted that nearly 85 percent banking executive agreed to the vulnerabilities at the audit stage of an acquisition and it significantly determines whether the deal goes through, and at what cost.