ARTICLE
14 March 2025

Common Privacy Pitfalls In M&A Deals

SM
Sheppard Mullin Richter & Hampton

Contributor

Sheppard Mullin is a full service Global 100 firm with over 1,000 attorneys in 16 offices located in the United States, Europe and Asia. Since 1927, companies have turned to Sheppard Mullin to handle corporate and technology matters, high stakes litigation and complex financial transactions. In the US, the firm’s clients include more than half of the Fortune 100.
Many expect that deal activity will increase in 2025. As we approach the end of the first quarter, it is helpful to keep in mind privacy and data security issues that can potentially derail a deal.
United States Privacy

Listen to this post

Many expect that deal activity will increase in 2025. As we approach the end of the first quarter, it is helpful to keep in mind privacy and data security issues that can potentially derail a deal. We discussed this in a webinar last week, where we highlighted issues from the buyer's perspective. We recap the highlights here:

  • Take a Smart Start Approach: Often when privacy "specialists" are brought into deals, it is without a clear understanding of the goal of the deal and post-acquisition plans. Keeping these in mind can be crucial to conducting appropriate and risk-based diligence. (Along with having a clear understanding of the structure of the deal.) Questions to ask include the extent to which the target will be integrated into the buyer. Or, whether privacy assets (mailing lists) are important to the deal.
  • Conducting Diligence: Diligence can happen on a piece-meal basis. There are facts about the target that can be discovered even before the data room opens. What information has it shared about operations and products on its website? Has there been significant press? Any publicly-announced data breaches? What about privacy or data security related litigation? When submitting diligence question lists, keep the scope of the deal in mind. What are priority items that can be gathered, and how can that be done without overwhelming the target?
  • Pre-Closing Considerations: There are some obvious things that will need to happen before closing, like reviewing and finalizing deal documents and schedules. There may also be privacy-specific issues, such as addressing potential impediments to personal information transfers.
  • Post-Closing Integration: In many deals, the privacy and cybersecurity team is not involved in the integration process. Or, a different team handles these steps. Issues that might arise- and can be anticipated during the deal process- include understanding the data and processes that will be needed post integration, and the personnel who can help (whether at the target or buyer).

Putting It Into Practice: Keeping track of the intent of the deal and the key risks can help the deal flow more smoothly. This checklist can help with your next transaction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More