Cyber security breaches pose a real threat to M&A deals butcompanies are too complacent in the assessment of cyber risk,according to a recent survey of 214 “dealmakers” from FreshfieldsBruckhaus Deringer.

The international law firm reports that 90% of surveyrespondents believe that cyber breaches result in deal reductionvalue and 83% say that their companies would abandon transactionsif cyber breaches are identified before sale completion.

Dealmakers recognize cyber's growing threat, but aren'taddressing it: More than 75% of respondents say that cyber securityis not analyzed during due diligence.

“You wouldn't dream of buying a chemicals plant withoutassessing environmental risk, so why would you buy a data-drivenbusiness without assessing the risks it faces around datamanagement and cyber-security?” says Chris Forsyth, co-head of thefirm's international cyber security team.

Top concerns include acquisition targets suffering cyber attacksduring deal discussion, the target being proven as a victim of dataor intellectual property theft by cyber attack, and evidence of atarget not handling a past breach effectively.

Acquirers are mostly concerned with cyber security duringtransactions, which doesn't translate to sellers as 81% areunconcerned or slightly concerned about the risk of the dealfalling through.

More American respondents (51%) say that cyber security hasbecome a part of due diligence than European respondents (39%), andthe U.S. has seen more suppliers audited, more internal cybersecurity specialists appointed and more external cyber securityconsultants engaged to review risks, the survey reports.

Cyber's impact on agent and broker deals is low, according toNational Underwriter advisory board member and OPTIS foundingprincipal Tim Cunningham. “Typically, agents and brokers don't haveaccess to credit card information as transactions are typicallyhandled by check. An insured pays a direct bill to insurancecarriers, so the risk is on their side.

“You could have some data breach, but I don't think anythingenormous would dampen M&A activity in the insurance industry,”he says.