Cybersecurity Due Diligence: Essential Considerations for a Compressed Timeline

Cybersecurity due diligence is a critical component of any M&A transaction, yet it is often constrained by aggressive timelines. To deliver meaningful insights within a 2-4 week window, a focused and pragmatic approach is essential. This requires prioritising areas most likely to reveal material risks without becoming mired in exhaustive detail.

Identity and Access Management

Identity and access management (IAM) forms the bedrock of an organisation's security posture. Weaknesses here can grant unauthorised access to critical systems and data. Our focus during a compressed diligence period is on evaluating the target's approach to user provisioning, de-provisioning, multi-factor authentication (MFA) adoption, privileged access management (PAM), and single sign-on (SSO) implementation. We seek to understand the administrative controls in place, identify any legacy systems with lax controls, and assess the robustness of their password policies. Key red flags include a lack of MFA for critical systems, widespread use of shared accounts, and an absence of a clear off-boarding process for former employees.

Network Perimeter Security

The network perimeter, whether on-premise or cloud-based, remains a primary attack vector. During diligence, we examine the target's firewall rules, intrusion detection/prevention systems (IDS/IPS), and external vulnerability scan reports. For cloud environments, we scrutinise cloud security posture management (CSPM) reports, security group configurations, and exposure of services to the public internet. The objective is to identify misconfigurations, unpatched vulnerabilities, and undue exposure. A lack of regular external penetration testing or recent, unaddressed critical vulnerabilities are significant concerns.

Code Security and Software Development Lifecycle

The security of the target's proprietary code and its development practices directly impacts its risk profile. We assess the software development lifecycle (SDLC) for integrated security practices: static application security testing (SAST), dynamic application security testing (DAST), and dependency scanning. While a full code review is beyond the scope of a short diligence period, we review recent security audit reports, open-source component analyses, and the presence of a vulnerability management programme. A notable absence of security gates within the SDLC or a backlog of unaddressed critical vulnerabilities in production code signal elevated risk.

Third-Party Risk Management

Organisations increasingly rely on a complex ecosystem of third-party vendors, each representing a potential entry point for attackers. Our diligence process includes reviewing the target's third-party risk management framework, vendor contracts for security clauses, and evidence of due diligence performed on their critical suppliers. We inquire about their process for managing access granted to third parties and the monitoring of third-party security performance. Inadequate third-party oversight or a history of breaches originating from a supplier warrant closer examination.

Incident History and Response Capabilities

Understanding a target's history of security incidents and their response capabilities provides insight into their resilience and maturity. We request a summary of past security incidents, including ransomware attacks, data breaches, and significant downtimes. We evaluate the target's incident response plan, its effectiveness in practice, and the lessons learned from previous events. The existence of a well-tested incident response plan and evidence of continuous improvement are positive indicators. Conversely, a history of recurring, similar incidents or an unexercised incident response plan presents a material concern.

Ransomware Exposure and Resilience

Given the pervasive threat of ransomware, assessing a target's exposure and resilience is paramount. This involves evaluating their backup and recovery strategies, network segmentation, endpoint detection and response (EDR) solutions, and employee security awareness training. We seek confirmation that critical data is regularly backed up, immutable backups exist, and recovery procedures are routinely tested. A lack of robust backups, inadequate network segmentation, or an absence of a clear ransomware response strategy are critical red flags.