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Don’t Acquire a Company Until You Evaluate Its Data Security

Posted on April 16, 2019 by Dissent

The new issue of Harvard Business Review has an article by Chirantan Chatterjee and D. Daniel Sokol. It begins:

When Marriott International acquired Starwood in 2016 for $13.6 billion, neither company was aware of a cyber-attack on Starwood’s reservation system that dated back to 2014. The breach, which exposed the sensitive personal data of nearly 500 million Starwood customers, is a perfect example of what we call a “data lemon” — a concept drawn from economist George Akerlof’s work on information asymmetries and the “lemons” problem.  Akerlof’s insight was that a buyer does not know the quality of a product being offered by a seller, so the buyer risks purchasing  a lemon — think of cars.

Read more on HBR.


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