Image CreditPearl Permejo
Pearl Permejo

Gauging the recent activity in mergers and acquisitions (M&A), specifically in the tech space, cybersecurity firms are increasingly becoming the stars of the show. The brightest ones being those specializing in email, data security, and encryption. This surge in activity highlights a critical aspect of the present moment: the essential need for robust security measures to protect sensitive communication. It makes perfect sense for businesses, especially those engaging in mergers and acquisitions to prioritize email security features like encryption, especially considering the significant risk of financial loss.

Is this really a cause for concern? Unquestionably yes. Thelatest FBI data shows that business email compromise (BEC) has led to nearly $51 billion in reported losses.

Recent business activity in the cybersecurity domain is underscored by several significant transactions. For instance, Thoma Bravo's acquisition of Proofpoint for $12.3 billion stands out as the largest deal in cybersecurity history, overshadowing Broadcom's $10.7 billion acquisition of Symantec's enterprise division. Additionally, the Symphony Technology Group's purchase of FireEye's enterprise security division for $1.2 billion and its acquisition of McAfee's enterprise business for $4 billion further exemplify the market's dynamism.

Smaller transactions, such as Cofense's acquisition of Cyberfish and HelpSystems' purchase of Agari, underline the sector's vibrancy. Moreover, the successful IPO of KnowBe4, a company specializing in cybersecurity awareness with a focus on email phishing, further signals the market's robust appetite for secure communication solutions.

The heightened focus on email security is not unfounded. A majority of cyber attacks begin with a malicious email, underlining the critical role email plays in an organization's security posture. Further, a study found that a comprehensive understanding of email security can raise cybersecurity awareness by 31.3% highlighting its crucial role in the overall defense against cyber criminals.

With the pandemic amplifying the need for enhanced remote work security, companies are scrambling to fortify their email and communication platforms against an increase in cyber threats. This environment has made email security service providers quite attractive as investment vehicles and paved the way for a slew of venture-backed companies, like Material Security and Armorblox, to secure substantial funding for their innovative security solutions aimed at keeping communications safe.

The Amplified Risks in Mergers and Acquisitions

Mergers and acquisitions (M&A) inherently elevate the levels of risk and security challenges for organizations, particularly in the realm of email communications. As the primary conduit for M&A dialogue, email systems carry the weight of sensitive data whose integrity is paramount for the success of these transactions.

Conflict of Security Paradigms

In the pursuit of synergies such as cost savings, growth acceleration, and increased market share, M&A activities often bring to light the discord between the security policies of merging entities. This misalignment can create vulnerabilities as systems integrate, presenting openings for security breaches. The consolidation process necessitates a reevaluation of security frameworks to establish a cohesive strategy that encompasses the best aspects of both organizations' protocols.

Expansion of the Attack Surface

The transitional period following the closure of an M&A deal is marked by significant upheaval, with the need to operate within sunset, future-mode, and transitional environments concurrently. This fragmentation not only stretches the resources of IT and security teams but also broadens the attack surface, increasing the likelihood of unauthorized access and data breaches. The complexity of managing multiple operating environments simultaneously demands a sophisticated approach to security, one that is capable of adapting to the fluid nature of post-merger integrations.

The Human Element

Beyond the technical challenges, the human factor plays a critical role in the security risks associated with M&A. The uncertainty and anxiety stemming from potential changes in leadership, strategy, and job security can drive employees to act out of character, potentially compromising sensitive information. Whether through negligent or malicious actions, the risk of insider threats escalates, necessitating vigilant monitoring and management of employee behavior during these transformative periods.

Email Security Challenges

A couple of immediate email security vulnerabilities also crop up, the primary ones being;

Accidental Disclosure

One of the most immediate threats in an M&A context is the accidental disclosure of sensitive information. The increased volume of emails and the inclusion of new stakeholders in these communications amplify the risk of sending information to unintended recipients. Such incidents can not only lead to data loss but also erode trust among parties and potentially jeopardize the transaction.

Phishing and Impersonation Attacks

The prevalence of phishing, impersonation, and account takeover attempts during M&A activities cannot be overstated. Attackers frequently exploit the chaos and heightened email traffic by launching sophisticated social engineering attacks aimed at extracting valuable information. Defending against these threats requires a multi-faceted approach that includes threat prevention, education, and enhanced awareness among all stakeholders involved in the M&A process.

Internal Threats and Data Exfiltration

The surge in internal communications during M&A deals elevates the risk of sensitive data being inadvertently or maliciously shared outside the organization. Vigilance and advanced detection capabilities are essential to identify and mitigate the risks of data exfiltration by insiders, whether they are motivated by malice or negligence.

Visibility and Control

Maintaining oversight over the email environment amidst the flux of M&A activity is a daunting task. The integration of disparate systems and the influx of new users necessitate enhanced visibility into email communications and the threats they may harbor. Organizations must deploy comprehensive security solutions that provide a clear overview of email-related risks, facilitating swift and effective remediation.

A Cybersecurity Ally in Mergers and Acquisitions

Michael Ginsberg, CEO of Echoworx, a firm with specialty email encryption services shared insights about the company's strategic role in supporting businesses' email security through their mergers and acquisitions processes. He shed light on the importance of secure email communication facilitated by encryption, especially for businesses with global operations. "We recognized that encryption should ensure seamless, secure email communication, vital for businesses operating globally. Today, we help companies meet regulatory requirements efficiently by automating and tailoring the encryption process without adding operational complexity. Our commitment is to deliver a robust, adaptable encryption solution that supports our clients' needs in a straightforward, effective manner," explains Ginsberg.

Simplifying Email Encryption Across Borders

The challenge of aligning with various international privacy laws is a significant hurdle for businesses engaged in global operations. Echoworx's customizable encryption solutions address this challenge head-on by enabling organizations to adapt to the ever-changing landscape of privacy regulations effortlessly.

With about 90% of IT executives emphasizing the importance of protecting documents and information shared via emailaccording to a recent survey, and only 7% finding it easy to encrypt sensitive data, Echoworx's role becomes indispensable. The platform's ability to automate and customize encryption processes allows businesses to meet specific regulatory requirements without complicating the user experience.

Streamlining Compliance and Communication

During M&A activities, the risk of data breaches and compliance violations surges, underscoring the need for a robust email encryption solution. Echoworx provides a suite of email data protection options that can be tailored to various business cases, ensuring that all communications are automatically encrypted and tracked. This level of customization and automation is critical for navigating the diverse regulatory environments that companies may encounter.

Half of the IT leaders surveyed stress the necessity to prioritize compliance to stay ahead of the fragmented privacy laws present across different regions. Echoworx's platform enables organizations to automatically adjust verification processes, branding, and language options based on the recipient's location, ensuring clarity and compliance in communications.

Facilitating a Secure Remote Workforce

As the workforce becomes increasingly remote—a trend that is expected to persist—ensuring secure communication with customers and within the organization is paramount. Echoworx addresses this need by offering a variety of authentication and delivery methods, including passwordless and biometric options, that cater to a global and mobile workforce. This flexibility is essential for authenticating customers swiftly and securely, eliminating potential encryption barriers and fostering a safe digital business environment.

Advancing Beyond Competitors

Echoworx distinguishes itself by providing more features and options that global enterprises require for email data protection. With eight delivery methods, seven authentication options, support for 28 languages, and customizable branding policies, Echoworx ensures that organizations can communicate securely and efficiently, regardless of geographical boundaries. This comprehensive approach not only facilitates seamless email transitions during M&As but also positions Echoworx as a leader in the field of email encryption.

Perhaps most importantly, Echoworx's ability to consolidate disparate systems and simplify email transitions during M&As is a testament to its utility. Moving legacy and on-premise email encryption systems to a unified cloud platform allows Echoworx to facilitate smoother integration processes for its. The endorsement from Echoworx customers who have undergone M&As without any disruption to their email encryption services, despite changes in their email security providers, underscores the platform's reliability and effectiveness.

Email Risk Reduction During M&A

The challenges posed by M&A activities—ranging from conflicting security paradigms to the expansion of attack surfaces and the potential for internal threats—underscore the importance of a strategic approach to cybersecurity. Echoworx's suite of email data protection options, coupled with its innovative approach to streamlining compliance and facilitating secure remote workforces, positions it as a key player in mitigating these risks.

Peak cybersecurity threats are here to stay, just look at the geopolitical situation in the world today. As the tech sector continues to evolve, the role of cybersecurity in ensuring the integrity and success of M&A transactions will only grow. Firms like Echoworx are leading the charge, providing the tools and expertise necessary to secure not just data, but also the trust and confidence of all parties involved in these pivotal deals. In the end, the real value of a merger or acquisition lies not just in the assets and synergies it creates but in the secure foundation upon which it is built.