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Three reasons why IT security and compliance are essential in software M&A

Imagine you are about to invest in a promising software company that offers you high returns. Those returns could be in jeopardy if you don't check that company's IT security and compliance requirements.

 Reason 1: EU and OpenChain-Compliance

 Not just a standard, but a must

In a digitally networked Europe, compliance with IT standards such as OpenChain not only desirable, but essential. Software companies today must not only be innovative, but also meet the growing legal requirements in areas such as Open Source Software (FOSS) Licenses and Export restrictions .

 Reason 2: Software Due Diligence

 An investment can quickly become unattractive

Your Software Due Diligence can quickly become a nightmare when IT Security vulnerabilities or Compliancedeficiencies occur. What initially appears to be a lucrative investment can quickly lose its appeal when the costs of fixing security vulnerabilities and following compliance requirements become immeasurable.

 Reason 3: IT Risks

 An unforeseen risk can drastically affect the value

In our digital era IT risks are omnipresent. A single security breach can drastically reduce the value of a company overnight. A Cyber Attack, one Data breach or a breach of FOSS licensing terms can have not only financial, but legal consequences that can seriously jeopardize the reputation of your investment.

 Solution: A Proactive Approach and aftercare

 Have security and compliance assessed in 24 h

Careful evaluation of IT-Security and Compliance when acquiring software companies is therefore not only advisable, but essential. A proactive approach ensures that you know from the outset what you are investing in and what risks you may be taking. An estimate of the potential effort will help you factor in additional costs.

You need this information in the Due Diligence Phase of your M&A very quickly - so that the process is not blocked.

Once this foundation has been laid, the next step is to secure your investment in the Post Merger Integration Phase The establishment of a Secure Software Development Cycle (SSDLC) with compliance is the next step. Prioritization helps to fix the low hanging fruits quickly with little effort and to save costs in the process.

  • Existing security vulnerabilities need to be fixed in a prioritized manner,,
  • fixable license violations must be mitigated by a compliance package and
  • more complicated license violations or export restrictions must be resolved through appropriate measures.
Sustainability: New security vulnerabilities are discovered every day in existing software components. Some can be serious. Export restrictions can change due to global political events. In order to be able to react quickly, you need an alert mechanismthat proactively and specifically informs your investment. That tells you where and how something needs to be changed to avoid disaster their vermeiden.

 Conclusion

A careful assessment of IT security and compliance when acquiring software companies is therefore not only advisable, but essential.

A proactive approach ensures that you know from the outset what you are investing in and what risks you may be taking. An estimate of the potential effort will help you determine the true cost of your acquisition.

Sustainable protection of your investment is equally important. This requires initial investment in software security & compliance and an alert mechanism that kicks in when action is needed to safeguard the investment.

WoBeeCon GmbH is happy to support you quickly and reliably with your investment.

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