Privacy and Data Security in M&A Transactions: Five Legal Requirements and Practical Deal Considerations

Insight

June 03, 2026

Privacy and data security have become central considerations in mergers and acquisitions, reflecting both regulatory expansion and the growing role of data as a core business asset. What was once a niche diligence topic now routinely sits alongside intellectual property and employment as a key risk area. Failures in this space can expose buyers to regulatory investigations, class actions, and operational disruption, while restrictions on data use can undermine the commercial rationale for a transaction. At the same time, the act of sharing data during diligence and integration can itself raise compliance issues.

Against this backdrop, deal teams increasingly need a structured approach to identifying and addressing privacy and cybersecurity risks. This Insight outlines five core legal requirements that should frame diligence and transaction planning, followed by practical considerations for implementing privacy and security protections in deal execution.

1. SECTOR-SPECIFIC PRIVACY LAWS DRIVE THRESHOLD RISK ASSESSMENT

The US privacy framework remains fragmented, relying on sector-specific regulation rather than a single comprehensive statute. This creates both flexibility and complexity for dealmakers evaluating compliance risk.

At a high level, privacy exposure in transactions often concentrates in the following key categories:

Financial services data, governed by statutes such as the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act
Healthcare information subject to HIPAA and related laws
Children’s data regulated under the Children’s Online Privacy Protection Act and education records under the Family Educational Rights and Privacy Act
Consumer data subject to state-level privacy regimes, most notably California’s Consumer Privacy Act and analogous statutes in other states
Consumer marketing activities, including telemarketing and text messaging

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