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Secure File Sharing for Mergers and Acquisitions

by Robert Dougherty updated April 24, 2024 Secure File Sharing

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Mergers and acquisitions (M&A) are essential components of the business landscape, representing a major element in the global economy. Mergers and acquisitions are commercial activities that facilitate the growth of companies through consolidation and reorganization of corporate structures. Companies use M&A for a variety of reasons, such as to gain access to new markets and technologies, to enhance their product portfolio, to increase economies of scale, or to gain a competitive edge in the market.

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Importance of Secure File Sharing in M&A

File sharing is an integral part of the M&A process due to the need to share confidential documents such as business plans, legal documents, financials, and presentations between two or more parties that are involved in the deal. Over the years, businesses have resorted to physical devices, such as USB drives, to transfer files securely. However, these methods of file sharing have several drawbacks, most significantly the inaccuracies and delays they may cause due to their manual nature. As a result, businesses are increasingly turning to secure file sharing services to streamline the M&A process and ensure that the documents remain secure throughout the entire process.

Secure file sharing services provide a secure, reliable, and efficient way to share documents online between the parties involved in the M&A process, including dealmakers, lawyers, financiers, bankers, investors, and other advisors. These services help to streamline the M&A process by eliminating the need for manual methods of file sharing, thus saving time and money in the overall process. Moreover, with secure file sharing, users can access the shared documents from any location, ensuring that the process is not hindered by geographical distances.

In addition to the convenience, secure file sharing also provides several important security measures to protect confidential documents from unauthorized access. Such security measures include digital rights management, data loss prevention, encryption, and multi-factor authentication. These measures help to protect the documents from cyber threats and ensure that only authorized parties can view the shared documents.

The use of secure file sharing services for M&A deals has become an emerging trend among businesses due to the growing need to share confidential documents in a secure and efficient manner. With secure file sharing services, businesses can ensure that sensitive documents and information remain safe and secure during the entire M&A process.

Challenges in Secure File Sharing for M&A

M&A activities involve the sharing of confidential data between organizations, requiring effective and secure file sharing solutions to ensure that data remains safe from potential malicious actors. Ensuring secure file sharing for M&A deals presents a unique set of challenges, such as compliance with data privacy laws, managing the large volumes of data, and catering to multiple stakeholders. To ensure a successful M&A process, organizations must select a secure file sharing solution that can manage these challenges:

1. Sensitive Nature of M&A Data

Mergers and acquisitions (M&A) involve the sharing of sensitive intellectual property, financial details, customer relations, and other confidential data between organizations that are in the process of joining. As such, both organizations need to ensure that any data related to the M&A process is shared safely and securely to reduce the risk of a data breach. As company files may include items such as private customer information, pricing information, and other confidential data, secure file sharing methods must be used to protect the data.

2. Need for Collaboration Among Multiple Parties

M&A deals are rarely conducted between only two entities, so secure file sharing must be employed in order to ensure that sensitive files are shared only with approved parties. This often means sharing files with third-party consultants, lawyers, and other stakeholders. As such, secure file sharing methods must cater to multiple parties, allowing each party to access the necessary files and data with the appropriate security measures in place.

3. Compliance With Data Privacy Laws

Any data sharing in the context of M&A must adhere to applicable data privacy laws. This includes laws such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). As such, organizations need to ensure that any file sharing method they employ is compliant with the relevant data privacy laws. This includes ensuring that sensitive data is stored securely and can only be accessed by authorized personnel.

4. Managing the Volume of Data

When it comes to M&A, the amount of data that needs to be shared can be quite large. This can be a challenge for secure file sharing methods, as the technology must be able to scale with the size and volume of the data. In addition, the method must be able to transfer large files quickly and securely without compromising on security. As such, organizations must select a secure file sharing solution that can handle the large volumes of data required in an M&A process.

Solutions for Secure File Sharing in M&A

To ensure the security of confidential data, secure file sharing is essential. Two of the most effective solutions for secure file sharing in M&A include virtual data rooms and secure file sharing platforms. By utilizing these solutions, companies can ensure the safe and secure sharing of sensitive documents and data while maintaining control over their confidential information.

1. Virtual Data Rooms and M&A Activities

One of the primary solutions for secure file sharing in M&A is virtual data rooms. Virtual data rooms are specialized cloud-based platforms that provide a secure environment for confidential file sharing. The technology uses encrypted data transmission, secure virtual conference rooms, and authorization control to ensure that only authorized users can access the data, such as those involved in the M&A process.

a. How Virtual Data Rooms Work for M&A

Virtual data rooms work by creating an exclusive and secure environment that is accessible to authorized users only. Authorization levels can be set to control who has access to what data. The platform allows users to quickly search and filter documents based on various parameters and tags. Documents are also encrypted and securely transmitted to prevent unauthorized access. Furthermore, virtual data rooms have reporting and collaboration capabilities, as well as annotation tools to facilitate communication and collaboration between stakeholders.

b. Benefits of Virtual Data Rooms for M&A Activities

The primary benefit of using virtual data rooms for M&A is that it enables secure data transmission and communication among multiple stakeholders in a highly secure environment. Virtual data rooms also provide users with the ability to upload and manage a large number of documents in a single platform and quickly search for data with the help of their powerful search capabilities. Other benefits include collaboration tools, audit trails, and reporting metrics to help enhance decision-making and efficiency in the M&A process.

Overall, virtual data rooms provide an ideal solution for secure file sharing in mergers and acquisitions. It enables users to securely share confidential data and facilitate collaboration between stakeholders while maintaining the security and confidentiality of the data. Virtual data rooms also provide reporting, collaboration, and search capabilities to help enhance the decision-making process in M&A projects.

1. Secure File Sharing Platforms

Secure file sharing platforms are essential for M&A transactions, since M&A involves the sharing of confidential information among different parties. Secure file sharing is the process of allowing members of a system to securely share files, documents, images, and other types of data over the internet. In order for secure file sharing to be effective, it is important that the platform is secure, reliable, and user-friendly.

a. Features of Secure File Sharing Platforms

Secure file sharing platforms should come with features that ensure secure transfer of confidential data. This includes features, such as encryption and access control, to prevent unauthorized access to sensitive files. Additionally, the platform should include authentication and authorization protocols, such as multi-factor authentication, to ensure that the right person is accessing the right information. Finally, the platform should also provide audit trail capabilities to trace who has accessed certain files and when.

Best Practices for Secure File Sharing in M&A

Secure file sharing is an important element in mergers and acquisitions (M&A) for ensuring the safety of sensitive data. To assist with ensuring secure file sharing in M&A, there are several best practices that can help protect data from any unauthorized access. They include:

1. Establishing Access Controls

Access control is one of the most important aspects of secure file sharing in M&A. Organizations should ensure that every user has their own login credentials and that users can access only the files they need. Access should be based on the user’s role and responsibilities and should be monitored and revoked upon termination of service. It is also important to create different user groups, such as M&A teams, third-party advisors, and external vendors, each with different access levels. Organizations should also ensure that user authentication is properly configured and user passwords are managed properly.

2. Implementing Encryption

Encryption is an important aspect of secure file sharing, as it helps protect sensitive data from unauthorized access. Organizations should encrypt data sent to and from external parties and stored on any device, such as laptops and mobile devices. Encryption should also be used for data stored in the cloud, as it will help protect it from potential cyberattacks.

3. Monitoring Activity and Auditing

Organizations should monitor user activity and provide regular audits of the information to ensure that the data is being accessed and used appropriately. This includes monitoring user logins and access to sensitive data, as well as recording any changes to the data. The audit trail should be kept up to date and reviewed regularly to detect any suspicious activity.

4. Training Employees

It is important to ensure that employees understand the importance of secure file sharing and are aware of the policies in place. Employees should be trained on how to access and share files securely, including understanding the different file access levels and encryption protocols used. Training should also include how to identify suspicious activity and the correct procedures to follow if they suspect a breach or unauthorized access.

Kiteworks Secure File Sharing for Mergers and Acquisitions

The Kiteworks Private Content Network (PCN) includes comprehensive secure file sharing capabilities used to track, control, and secure sensitive content sharing and collaboration during M&A activities. This includes the ability to create virtual data rooms. Kiteworks secure file sharing is designed to enable centralized governance at the file and folder layers, controlling and tracking who accesses each, who can edit, when edits are made and by whom, with whom it can be shared, and where it can be shared.

Other capabilities in Kiteworks that organizations involved with M&A activities find useful include:

Give business leads instant self-service management of folder provisioning and permissions
Receive automatic notifications of downloads, uploads, new versions, and comments
Search for content using full-text search
Seamlessly integrate Microsoft Office, iManage, Google Suite, and others using plugins
Flexible deployment options: on-premises, private cloud, or FedRAMP

In addition to the above, Kiteworks is enveloped with a hardened virtual appliance that creates security layers, dramatically minimizing security risks while ensuring adherence with cybersecurity frameworks and data privacy regulations. For example, Kiteworks has received FedRAMP Authorization for Moderate Level Impact six consecutive years and touts compliance with ISO 27001, 27017, 27018, SOC 2, FIPS 140-2, Cyber Essentials Plus, and Information Security Registered Assessors Program (IRAP) assessed to PROTECTED level. For M&A activities that cross geographies and countries, this expansive compliance on the part of Kiteworks enables organizations—including legal firms—involved in M&A activities to ensure they are in adherence with regionally specific compliance regulations.

Get started today by protecting your M&A file sharing and collaboration activities with Kiteworks. Schedule a custom-tailored demo to see Kiteworks in action.

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