LGPD in M&A Processes: The Hidden Risk in Valuation

27/04/2026

LGPD in M&A processes: the data liability that nobody considers in valuations.

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How digital security maturity has become a due diligence criterion, and what target companies need to demonstrate before any negotiations.

Transactions M&A (Mergers and Acquisitions) are, by nature, processes of in-depth evaluation. In this sense, financial auditors, client portfolios, and tangible and intangible assets are rigorously analyzed before any decision is made. However, there is a liability that frequently It doesn't appear in the valuation. (Company valuation assessment): digital security maturity and compliance with LGPD (General Data Protection Law). This is a risk that can halt transactions, reduce the purchase price or generate unexpected liabilities for the acquirer. This article analyzes why this liability matters, and what target companies need to demonstrate before sitting down at the negotiating table.

Why LGPD compliance has become a due diligence criterion.

The LGPD came into effect in Brazil in 2020 and established clear obligations for companies that collect, store, and process personal data. From then on, the compliance history A company's ownership has become a relevant asset or liability in any transaction.

The risk for the acquirer is direct: in many cases, the new controller takes the responsibility for the acquired company's data liabilities. This means that fines generated by past practices, unreported data breaches, or... irregular databases These could become a problem for the new controller.

Historical international cases prove this risk. In the case of Yahoo!, the revelation of hidden data breaches during the negotiation. knocked down The acquisition by Verizon was valued at $350 million.

What does data due diligence examine in practice?

A proper data audit in an M&A process goes far beyond simply verifying a... privacy policy published on the website. She examines the information chain of custody In detail. Key checkpoints include:

Mapping what data is collected., for what purpose and based on what legal justification

Access controls, to verify who has permission to access which information

Security incident historyincluding violations that were not reported to the authorities.

Data disposal procedures, especially the proof of irreversible destruction information on obsolete devices

Existence and role of the DPO (Data Protection Officer), a mandatory figure for many categories of companies.

The absence of adequate documentation at any of these points is a warning sign which could jeopardize the transaction or require significant retentions of capital as collateral.

The impact on valuation when compliance is weak.

Digital security maturity affects the valuation of forms. direct and indirectAmong the most common consequences are:

Reduction in purchase pricewhen auditors identify relevant compliance liabilities

Retention of funds in escrow accounts (escrow), until the identified risks are mitigated

Transaction paralysiswhen irregular data involves the company's core business.

The indirect consequences are equally relevant. Companies with weak data protection record They suffer reputational damage that affects their customer base, partners, and potential buyers during and after the negotiation process.

What target companies need to demonstrate

Preparing for an M&A process, from a data perspective, It begins long before the negotiation.The companies that come to the table with solid governance They have more bargaining power and convey more security to the buyer.

The essential elements to demonstrate include:

Updated data map, classifying information by sensitivity and purpose.

Security policy implemented.with evidence of real-world application and not just formal documentation.

History of regulatory compliance, including communications with the ANPD (National Data Protection Authority)

Internal or external audit reports information security

Incident response plan documented and tested

Furthermore, traceability of old hardware disposal This is a point that has derailed important negotiations. Without proof that the data has been irreversibly destroyed, auditors presume exposure and... They adjust the transaction risk upwards..

Data governance as a bargaining chip.

Companies that invest in digital maturity Before a transaction, they are not just protecting themselves from risks. They are building a solid negotiating argument.

In regulated markets, compliance with the LGPD (Brazilian General Data Protection Law) is often a... entry requirementCorporate clients and strategic partners assess the level of governance of suppliers before entering into long-term contracts. Similarly, strategic acquirers value companies that have already demonstrated... maturity in this aspect.

In this scenario, data protection ceases to be a legal obligation and becomes a necessity. trading assetAnd like any asset, it's worth more when it's built up in advance, not hastily during the audit process.