The evolution of cybersecurity-related representations and warranties in M&A transaction documentation has had an impact on financing transactions.

Major M&A transactions and IPOs have become the target of increasingly sophisticated cyberattacks, in some cases affecting thousands of companies along the supply chain. Regulators have responded with stepped-up enforcement, extending their reach not just to victim companies but also to third parties like payment processors and insurance carriers.

Today’s most pressing cybersecurity risks can have a significant effect on borrowers and their lenders, who should take several context-specific steps to limit risk, in addition to undertaking standard diligence including document review, management interviews, and analysis of publicly available information.

Latham & Watkins partners Robert Blamires, Tony Kim, and Jane Summers discuss in this Q&A how cybersecurity representations and warranties have evolved in M&A transactions, how cybersecurity risks can be addressed in the loan market, and how credit agreements can deal with cybersecurity.