How to Maintain Confidentiality in M&A

It is imperative for companies to take steps to safeguard valuable data, and this is particularly important during transactions that require collaboration with external parties. During a merger or acquisition, a great deal of data will have to be shared and analyzed, increasing the likelihood of it becoming compromised or misappropriated. Here are some tips on maintaining confidentiality:

Retain the Right People

Information sharing is inevitable during an M&A transaction, so it is important to trust the people who will be given access to company data. For many business deals, and especially lengthy, complicated ones such as M&A, a lot of people will be needed to get the deal done. With so many professionals from different firms involved in the process, it is easy to lose sight of what data is going where. Thus, anyone who will be allowed to view sensitive data must be vetted. One of the best ways to find the right people for your deal team is by asking for recommendations from trusted associates and colleagues. And, companies shouldn't be afraid to ask questions and request information regarding a prospective team member's past business dealings to determine suitability.

Mandate the Appropriate Agreements

Even if the professionals a company chooses have a longstanding relationship with one or more members of the company, it is always important to require the appropriate agreements. In most cases, non-disclosure and confidentiality agreements should be used to deter the dissemination of information and provide legal recourse in the event of an unauthorized disclosure. Of course, other measures may be necessary such as registering for a copyright or filing an application for a patent. Some companies may not want to take the time or spend the money on what they construe as unnecessary inconveniences, but fixing a problem later is always a lot harder than preventing it from the outset.

Utilize the Proper Technology

To ensure that data is stored and shared in a safe manner, it is important to invest in the right type of data management solution. For day to day operations, a basic, internal program may work. However, for a complex deal involving several, disjointed firms like M&A, it is wise to consider a solution that offers heightened security measures. Companies need to ensure that they retain control over their data, and given that a number of sensitive documents will be shared, it is necessary to utilize a highly secure solution. Some of the requisite specifications include multi-factor authentication, encryption, and certified data servers. By relying on a security-minded platform, it is less likely that confidential data will be compromised.

Institute the Necessary Safeguards

Trusting your people and using strong technology will not be enough to keep important data confidential. Companies must institute specific policies and procedures with respect to data management and security. Good intentions can never replace a coherent strategy, and it is critical that all personnel are effectively trained with regard to the company's data security goals and expectations. And, it is important for this plan to be disseminated amongst all levels, so that leadership, middle management, and those on the front lines are on the same page.