Merger or Partnership - Security and Crime Threat

a. An inevitable part of any merger is the rationalization of the work force. Typically in a merger there is two of each skill set available in the merged companies especially if the merger is one where a competitor firm is being acquired by a more powerful parent. The senior members of the acquired company get unprecedented access to the IP and confidential company data. Although a typical merger ties the proprietors and senior managers of the acquired company with privacy and non-compete clauses, it is difficult to prevent intellectual property from dissemination by these means. When the inevitable departure of these key executives happens in due course many companies end up seeding competitors promoted by the acquaintances or business partners of these departed executives. The dissemination of corporate IP in a merger or partnership is thus a major threat – in the euphoria of consummating a merger companies usually leave their doors wide open for losing precious company secrets to ex competitors who, if disgruntled can cause great harm,
b. The other big issue in a merger or partnership is based on the theory of “the weakest link” in IT or physical security. Typically post merger there is a chaotic period when the acquired companies processes and systems are being integrated into the parent company’s existing processes and systems. This compared with the “change of guard” in process and technology gatekeepers causes a window of opportunity for hackers or information thieves to target the weak link – the acquired company’s systems to get access to the acquirers networks. A vulnerability test of existing systems and procedures is usually not a part of the due diligence checklist of most acquiring firms where the focus usually is on audit of finances and business processes.