After a period of declining merger and acquisition activity, 2025 saw a surge in deals which increased in both value (40%) and volume (7%) across strategic, private equity and venture capital acquisitions.

This trend is expected to continue, as companies look to reinvigorate growth amid shifting operating patterns driven by AI and shifting global trade opportunities.

As target companies seek to boost their value and acquirers to lower deal costs, every detail counts – and that includes data security.

The hidden cost of data security for M&A

According to the Institute for Mergers, Acquisitions and Alliances (IMAA), 40% of acquirers discovered major cybersecurity issues during post-acquisition integration. Meanwhile, less than 10% of deals incorporated cyber due diligence during the M&A process.

Such oversight can prove costly for both acquiring organizations and target companies.

In 2020, hotel giant Marriott was fined $23.8m by the UK ICO and agreed a $52m settlement in the US for failing to update legacy – and previously breached – IT infrastructure used by subsidiary Starwood Hotels, which it acquired in 2016. In another example, failures on both sides proved costly in Verizon’s 2017 acquisition of Yahoo.

Maximizing deal value with data discovery

There are several strategic benefits to pre-deal data hygiene for seller organizations, that start with data discovery. These include:

  • Minimizing legacy data – Removing redundant, obsolete and trivial data (ROT) both reduces potential data security risks and lowers post-acquisition integration costs for buyers

  • Identifying data security risks – Proactive identification of sensitive data risks means sellers can actively address them before they’re identified through buyer due diligence processes.

  • Responsible remediation – Any weaknesses identified during the M&A process can be managed quickly and effectively with responsible remediation

  • Demonstrable compliance – Sellers can present good data hygiene with evidence showing where sensitive data resides and provide assurance that data security is effectively managed.

By removing data-related liabilities, target organizations can protect themselves from price adjustments or deal holdbacks.

Furthermore, these practices lower future seller liabilities, as many buyers are now enforcing reps and warranties (R&W) that place accountability for unknown and unforeseen circumstances (such as data breaches) back on sellers.

Minimizing liabilities with data-focused due diligence

There are also important benefits to adequate data security due diligence for buyers, both during and after the acquisition process, such as:

  • Managing regulatory exposure: The visibility gained from data discovery ensures that buyers can evaluate any inherent regulatory liabilities of the target company, such as CCPA, GDPR and PCI DSS.

  • Quantified decision-making: Understanding the data risks to be inherited from target companies allows more informed decision-making by buyers, including whether to complete or withdraw from the process.

  • Establishing future costs: Data volume and risk insights enable buyers to estimate more accurate post-acquisition operating and integration costs.

Data security insights are invaluable to acquiring organizations, to protect their investment, lower integration costs and ensure that they are able to deliver continuity of service across their expanded customer base.

Discovery benefits continue after acquisition

The value of effective data discovery extends beyond conclusion of the acquisition process, facilitating:

  • Cloud migration and digital transformation initiatives as part of post-acquisition systems integration and platform consolidation

  • Continuous data risk oversight through scheduled monitoring of on-premises and cloud environments, enabling early identification and effective management of risk exposures

  • Rapid remediation of data-related issues, facilitating incident triage, containment, investigation and response

  • Audit assurance for the board, shareholders and regulators, with verifiable evidence of data management practices

Enterprise Recon delivers M&A value

Ground Labs’ Enterprise Recon provides accurate visibility of personal data and sensitive information across on-premises and cloud environments.

With on-demand remediation and data management capabilities, Enterprise Recon ensures maximum visibility and control of sensitive data, and delivers scanning at scale, with low overheads and high accuracy.

Enterprise Recon offers crucial insights of data-related liabilities necessary for a secure transition. For sellers, it protects their market value; for buyers, it ensures the integrity of the investment. For all M&A activity, where data security can make or break a deal, data discovery is the bridge between a costly mistake and a confident close.

To find out how Ground Labs can help you navigate successful M&A, request a demo or book a call with one of our experts today.