Mergers and acquisitions (M&As) have become a common way to grow, diversify, and strengthen a company’s competitive position. When you think of M&A activity, you tend to think of tender offers, working capital agreements, post-close obligations, growth, diversification, increased market share, among many items. Yet, a crucial yet often underappreciated part of this process is Identity and Access Management (IAM). IAM is essential to protect critical data, provide seamless access to all teams during and after a merger, and ensure regulatory compliance.
In this latest of a three-part IAM blog series, we will explore why IAM is vital in M&As, the challenges and risks involved, and the approaches for managing identities across the two entities. We will also outline the best practices for managing IAM systems by merging the IAM solutions completely or by continuing to maintain separate solutions.
Why Identity Management Matters in M&As
What Are Identities in IAM?
IAM defines who has access to specific data, systems, and networks and how they can access them. Identities are the foundation of secure access, as they link users to roles and permissions within an organization’s digital landscape. Effective IAM ensures that only authorized individuals can access sensitive resources, making it a crucial component of any organization’s security framework.
Why IAM is Critical During M&As
When two companies merge, so do their unique sets of users, systems, applications, and access policies. Without careful IAM planning, an M&A can expose vulnerabilities, increase the risk of unauthorized access, and disrupt operations for both workforces and customers. Properly managing IAM during M&As ensures that employees from both entities can access the tools and data they need without creating security risks or compliance issues.
For example, while merging the two IAM systems, if access policies including IP addresses or network zones are not modified to incorporate new network zones of the other entity, several users will be unable to access critical applications and services.
Key Challenges of Identity Management in M&As
- Data Integration Difficulties
Different IAM systems operate with their own protocols, configurations, and data structures. For example, one company might rely on a combination of Microsoft Entra ID (formerly Azure Active Directory) and Active Directory (AD), while the other uses Okta Workforce Identity Cloud (WIC). Integrating identity data from these very different systems is complex, as they may have incompatible formats, attributes, and security protocols.
- Access Control Complexities
IAM in M&As involves synchronizing access controls across systems to prevent over- or under-privileged access to any user. Ensuring appropriate access permissions for all employees across two systems is a significant challenge, as the various roles, levels of permissions, and security policies could vary between the two identities.
- Compliance Risks
Different regions and industries have varying regulatory requirements. While merging IAM systems, they must consider compliance across all applicable standards, such as GDPR, HIPAA, and others. Maintaining consistent compliance in both IAM systems or in the new merged IAM system reduces the risk of legal penalties and ensures secure data management.
- User Experience Disruptions
Regardless of a merger between two companies, employees always need consistent access to essential tools and applications to remain productive. Especially during an M&A, IAM issues can disrupt access to resources, particularly when users encounter new security protocols, interfaces, and policies. A seamless IAM experience minimizes user frustration and ensures minimal effect on their productivity.
Risks of Poor IAM Management in M&As
- Security Vulnerabilities: Misaligned IAM policies, especially when managing two different IAM solutions, open doors to unauthorized access. This can lead to widespread data breaches that result in substantial regulatory fines. Weak IAM management can expose systems and data to attackers, leading to attacks like ransomware.
- Operational Disruptions: If IAM systems aren’t correctly aligned, employees may struggle to access the necessary applications and data, leading to productivity loss and delays in essential business processes.
- Increased Costs: The time and cost to manage separate or poorly merged IAM systems can quickly escalate, requiring additional manual effort and more tools. The financial damage can further increase due to operational downtimes, customer churn, and attacks due to security loopholes.
Approaches to Handling IAM in Mergers and Acquisitions
Managing the merger of IAM processes to balance security with operational efficiency can be done in several ways:
- Separate but Interoperable IAM Systems
This strategy retains two separate IAM systems while ensuring they work together. For example, if one of the organizations is using Microsoft Entra ID and the other is using Okta WIC, they may continue the same. Through identity federations and Single Sign-On (SSO), employees from both organizations can access resources across systems without needing multiple credentials.
Other configurations, such as user provisioning, role assignments, and access policies, can continue to be managed from each of the individual systems.
- Dual IAM with Integration Layers
Using IAM orchestration tools with two separate IAM solutions helps create a virtual layer that links both systems. These tools allow compatibility and management without the need for a full merge. They provide an “identity fabric” across the two IAM systems, facilitating seamless access while keeping each system intact and independent. This approach is especially valuable when legal or operational factors necessitate retaining separate IAM systems.
- Merging IAM Systems
A full merger of IAM systems is sometimes the best solution, especially for long-term simplicity and cost savings. This process requires careful planning and demands higher time, cost, and effort investment initially. However, by consolidating all identities, roles, and access controls into a single IAM system, organizations achieve unified access control, streamlined security protocols, and simplified management in the long run.
Migrating users, groups, roles, applications, and policies from one solution to another, requires expertise in both systems. For example, to migrate IAM data and configurations from Okta WIC to Microsoft Entra ID would require someone who understands both data structures thoroughly.
Each of these approaches provides distinct advantages and considerations, depending on the organization’s goals, regulatory requirements, and available resources.
Key Focus Areas for Effective IAM Management in M&As
There are several considerations to keep in mind for effective IAM management during M&As, including ensuring communication and synchronization across key components:
- Single Sign-On (SSO)
Implementing unified SSO ensures employees have streamlined access to applications, systems, and data across both organizations, reducing login fatigue and minimizing the risk of unauthorized access. SSO enables employees to transition between systems without re-authenticating.
- Consistent Multi-Factor Authentication (MFA)
Standardizing and aligning MFA policies across both IAM systems strengthens security across the organization. Tools like Microsoft Entra ID and Okta WIC support MFA, so organizations should decide whether to enforce MFA on one or both systems. Consistency in MFA policies helps prevent unauthorized access and maintains security standards across all access points.
- Automated Provisioning and Deprovisioning
Provisioning and deprovisioning help reduce the workload on IT teams and ensure quick access for new hires, while safely revoking access for employees leaving the organization. With the addition of new applications, systems, devices, and data due to an M&A, it’s important to ensure provisioning and deprovisioning workflows are in place across the entire combined landscape.
- Role-Based Access Control (RBAC)
Standardized RBAC policies across IAM systems reduces the risk of over-privileged accounts and protects sensitive data. It’s important to establish common roles across the IAM systems to keep the systems, applications, and data secure. Gaps in RBAC policies due to lack of planning and improper implementation can open doors to severe security risks that can give attackers privileged access to critical systems and data.
- Audit Logging and Compliance Tracking
Maintaining centralized monitoring and audit logs allows merged organizations to track access events and user activities across both systems, making it easier to meet regulatory audit requirements as a single entity. By consolidating audit logs, organizations can maintain visibility over user actions, improving compliance and protecting data integrity.
IAM Data Backup and Recovery: Ensuring IAM Resilience During and After M&As
Data backup and recovery are crucial for IAM systems, especially in the context of M&As. Several issues and errors can arise while consolidating IAM processes and policies between two organizations. Maintaining safe and quickly recoverable backups ensures resilience and operational continuity during and after an M&A.
HYCU is the only data protection solution with comprehensive IAM protection, including Microsoft Entra ID, Okta Workforce Identity Cloud (WIC), Okta Customer Identity Cloud (CIC), and AWS Identity and Access Management (IAM) – all from a single view.
By protecting your IAM data with HYCU R-Cloud™, you get:
- One-click data restore of your entire tenant or just a single item
- Backups on autopilot with flexible backup policies that run 24/7
- Secure, immutable off-site backups to S3 buckets that you own
- Cross-instance data restore for disaster recovery and safe testing
- Complete data estate visibility using Okta and/or Entra ID to identify data protection gaps across your digital landscape
- Comprehensive IAM data protection for your IAM stack from a single view
Conclusion
With M&As, managing IAM effectively is crucial for protecting sensitive data, ensuring seamless operations, and maintaining compliance. Each approach to IAM—whether merging, retaining separate systems, or implementing orchestration—requires careful consideration of security, user experience, and regulatory requirements.
A proactive IAM strategy addresses integration challenges, prevents unauthorized access, and supports uninterrupted productivity. As organizations move forward with their M&A journeys, protecting critical identity data and policies is a crucial step to ensure long-term resilience.
Additional Resources
- The Three Things You Need to Know About Identity and Access Management (IAM)
- Secure, reliable backup & recovery for AWS IAM
- Safeguard Your IAM Configurations
- Future of IAM Security: Data Protection for Entra ID and Beyond
- HYCU for AWS Identity and Access Management
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