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How to Negotiate a Cybersecurity and Privacy Data Safety Warranty in a Technology M&A Deal

Data loss is a problem for businesses every two seconds and projected to cost businesses $265 billion by 2031 So, it’s not surprising that more distributors are offering customers an entirely new type of warranty that’s called the cybersecurity guarantee. These warranties are designed to lower the financial risk that are associated with cyberattacks, and often serve as a complement to insurance. They cover the gaps left by insurance.

These warranties aren’t all the same. Some have strict rules that may keep companies paying a substantial amount for data retrieval in the event of a cyber invasion. These stipulations could include:

Incorporating this type of warranty into a technology M&A deal is an excellent way to make sure that the buyer has adequate protections against security risks that could arise, and that the vendor will take measures to prevent such attacks from occurring in the future. In addition to the normal representations and warranties in an asset purchase agreement, these new warranties can be bargained to address privacy issues, data security, and other relevant issues that are specific https://www.toptechno24.com to the deal being discussed.

A typical warranty will cover the cost of repairing and replace equipment, as well as the cost of IT labor, forensics, and compensation for individuals affected by the breach. Some warranties also cover legal expenses caused by lawsuits. A more comprehensive policy could also cover lost business revenue and the cost of reprogramming software and cost of repairing reputational damage caused by an incident of security.

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