TLDR
Most M&A technical due diligence assumes you’re evaluating a stable security posture. But sophisticated breaches can remain undetected for months, meaning you might be acquiring a company mid-incident without knowing it.
Standard diligence questionnaires and compliance reports won’t find active compromises. Here’s what changes when you need to verify you’re not inheriting an ongoing breach.
Here’s an uncomfortable piece of math: the median dwell time for a breach is 16 days for ransomware, but can stretch to several months for espionage-focused intrusions.
Your M&A diligence window is typically 30-60 days.
You’re essentially taking a snapshot of an environment that could be actively compromised, and your standard diligence process isn’t designed to detect it.
The question every acquiring company should ask is straightforward: how do you know the target isn’t currently breached?
This isn’t paranoia. Clean audit reports don’t mean clean networks. SOC 2 compliance verifies that controls existed at a point in time, not that the environment is free of active threats.
By the time ransomware actually deploys, attackers have typically maintained access for months, learning the environment and positioning for maximum damage.
Technical due diligence typically focuses on evaluating security programs: do they have policies, are patches applied, is MFA enabled, what’s their incident response plan?
These questions assess program maturity. They don’t answer whether the environment is compromised right now.
Standard due diligence asks “does this company have reasonable security?”
Threat-aware diligence asks “is this company currently breached?”
These require fundamentally different approaches, different expertise, and different access to the target’s environment.
What Standard Due Diligence Actually Tells You
Standard M&A cybersecurity diligence typically includes SOC 2 reports, penetration test results (often 12+ months old), questionnaire responses about security programs, and compliance certification status.
These artifacts have value, but they’re retrospective by design.
A SOC 2 Type II report verifies that specific controls existed during a defined period in the past. A penetration test from nine months ago shows vulnerabilities that existed then, assuming they’ve been remediated.
None of these artifacts are designed to detect active compromise. They measure program maturity and assume the environment is fundamentally clean.
For private equity firms, this gap has direct financial implications.
If a breach is discovered post-close, you own the incident response costs, regulatory penalties, customer notification obligations, and operational disruption. Cyber insurance often excludes incidents that were “known or should have been known” at acquisition.
Timeline matters. Most deep diligence happens during exclusive negotiation, precisely when the target company has the least incentive to disclose an active but unconfirmed security incident.
The acquiring company is operating with information asymmetry, and standard diligence processes weren’t built to overcome it.
What Changes When You Assume Potential Compromise
Active Threat Hunting vs. Vulnerability Scanning
Standard diligence produces a list of missing patches and known vulnerabilities.
Extended diligence shifts to active threat hunting: analyzing authentication logs for unusual patterns, checking for lateral movement artifacts, identifying suspicious data staging, and hunting for persistence mechanisms.
The challenge is access. Threat hunting requires examining live log data, authentication systems, and network traffic patterns.
Target companies rarely grant this level of access, and most don’t retain sufficient log data to support meaningful threat hunting.
Authentication and Backup Systems
Standard diligence reviews password policies and MFA implementation.
Extended diligence audits actual privileged account usage: who has administrative access, authentication patterns for those accounts, suspicious account activity.
The fundamental question is whether credentials have been compromised, which is difficult to determine definitively since compromised credentials used carefully look identical to legitimate access.
Backup compromise has become a standard ransomware tactic.
Standard diligence confirms backups exist and are tested. Extended verification checks whether backup systems themselves are compromised, who has access to backup administration, and whether backup infrastructure is properly segmented.
The diligence gap is that verification usually stops at “do backups work” rather than “have backup systems been compromised?”
Third-Party Access
Supply chain compromises and MSP breaches are well-documented attack vectors.
Standard vendor reviews produce a list of third parties with access. Extended auditing examines every remote access path, verifies every vendor connection, and checks authentication logs for third-party access patterns.
During diligence, third-party access often receives minimal scrutiny despite representing significant risk.
The Deal Impact
If extended diligence discovers indicators of active compromise, you have negotiating leverage and a complex decision.
Walking away means abandoning invested deal costs. Renegotiating requires quantifying uncertain risk. Requiring pre-close remediation destroys deal timelines.
The legal structure becomes complicated: how do you document findings without killing the deal? How do you define “active compromise” in contract language when indicators may be suggestive but not definitive?
Every acquisition with incomplete security visibility requires estimating: what’s the cost if there’s an active breach you don’t discover until post-close?
Can breach costs be escrowed? Does cyber insurance cover incidents that reasonable diligence should have discovered? Who owns regulatory notification if breach discovery spans pre and post-close?
The more common scenario is suspicion without confirmation.
Limited timelines don’t allow exhaustive threat hunting. You’re making an acquisition decision with incomplete security information.
If compromise is discovered after closing, you own the entire problem. Proving the seller knew or should have known requires expensive litigation.
The practical question becomes: can you safely integrate networks before you’re certain the target environment is clean?
Integration pressure is intense post-close, but integrating a compromised environment creates vectors for threat actors to pivot into your systems.
For private equity firms, one inherited breach can consume disproportionate management time across the fund and create reputational risk with limited partners.
For strategic acquirers, integration timeline pressure directly conflicts with security verification needs.
What Diligence Should Look Like When Stakes Are High
Standard M&A diligence allocates 3-5 days for cybersecurity within a 30-60 day window.
Extended threat-aware diligence requires adding 1-2 weeks specifically for security validation.
The ROI calculation is straightforward: for a $50M acquisition, extended security diligence might cost $50,000-100,000. A significant breach discovered post-close typically costs millions in remediation and business disruption.
The math heavily favors extended diligence, but deal momentum often overrides this logic.
Team and Access
Standard teams include risk assessors who review programs and policies.
Extended diligence requires offensive security expertise: professionals who understand how attackers operate and how to hunt for compromise indicators. Look for backgrounds in incident response, threat hunting, or red team operations.
The team needs to think like attackers, not auditors.
Standard diligence operates through documentation review and interviews. Extended diligence requires direct access to SIEM repositories, authentication logs, network flow data, and endpoint detection platforms.
This creates legal complications around NDAs and notification obligations.
Target companies reasonably worry about sensitive operational data leaving their control, particularly if the deal doesn’t close.
The Conversation
Requesting extended security diligence can create deal friction.
The practical approach is explaining that extended diligence protects both parties. If there is an active incident, finding it during diligence allows informed decisions about proceeding, pricing, and remediation.
Discovery post-close is worse for everyone.
For target companies in regulated industries or handling sensitive data, extended diligence can be framed as standard practice for responsible acquirers.
The request works better with clear scope definition: what access you need, what you’re looking for, how findings will be handled, and how results affect deal terms.
Due Diligence That Matches the Threat
Standard M&A cybersecurity diligence answers whether a company has implemented security controls.
Threat-aware diligence asks whether the company is currently compromised.
These are fundamentally different questions requiring different expertise and different access.
For acquisitions in healthcare, financial services, critical infrastructure, or companies holding valuable IP or sensitive data, can you afford to accept that uncertainty?
When acquiring a company whose value depends on customer trust or operational continuity, the cost of inheriting an undiscovered breach can eliminate the entire investment thesis.
The core question isn’t whether to extend diligence timelines. It’s whether you can afford not to.
Extended security diligence isn’t an expense item, it’s risk mitigation with measurable return.
What’s the cost of being wrong about whether the target environment is currently compromised? That calculation should drive how much diligence is enough.