5 Data Problems Every M&A Team Faces

Mergers and Acquisitions (M&A) are a data risk event because the acquiring organization instantly becomes responsible for information it did not create, manage, or govern.

Mergers and acquisitions do not simply transfer assets. They transfer liability tied to email systems, collaboration platforms, archives, retention rules, and backups. The moment a deal closes, legal and compliance teams inherit operational and regulatory responsibility for all of that data.

For enterprise buyers acquiring smaller companies, uncertainty begins immediately. Inherited environments are often complex, inconsistent, and poorly documented. That lack of clarity weakens defensibility, increases regulatory exposure, and creates problems that may not surface until audits, investigations, or litigation.

M&A teams consistently face five core data challenges: Not knowing what they just inherited, inheriting operational costs, figuring out what needs to be preserved, making sure legal holds survive tenant changes, and spoliation during the transition.

Understanding these risks from day one is what separates reactive clean-up from proactive governance.

Key Takeaways

• M&A data risk begins immediately at deal close when legal inherits unfamiliar systems and retention obligations.
• Visibility into Microsoft 365, Exchange, and legacy environments is essential for defensibility.
• Operational chaos after acquisition increases audit and compliance exposure.
• Metadata and communication context must be preserved to maintain evidentiary integrity.
• Custodian-based preservation enables targeted, defensible data protection.
• Legal holds must be actively validated during tenant migrations and system transitions.
• Decommissioning legacy systems without structured safeguards increases spoliation risk under Rule 37(e).
• A governance-led M&A data strategy protects compliance posture and enterprise value.

1. What Did We Just Inherit?

What you just inherited after an acquisition includes every system, mailbox, file share, archive, and retention setting tied to the acquired entity. This means you are now a Data steward.

Legal and IT teams frequently take ownership of multiple Microsoft Teams environments, OneDrive and SharePoint repositories, entire Microsoft 365 tenants, on-premises Exchange servers, and disconnected legacy backups. The core issue is not volume alone; it is visibility.

If you cannot clearly identify where data resides, who owns it, what retention rules apply, and whether litigation holds already exist, you cannot confidently demonstrate responsible oversight:

• Courts evaluate whether organizations took reasonable steps to preserve relevant electronically stored information once litigation was anticipated.
• This standard is outlined in Rule 37(e) of the Federal Rules of Civil Procedure

Without a structured post-close assessment, proving that reasonable steps were taken becomes difficult. Visibility is the foundation of defensibility.

2. Why Is Operational Chaos So Common After an Acquisition?

Operational chaos is common after an acquisition because smaller organizations often grow without structured governance controls.

Enterprise buyers frequently inherit multiple Microsoft 365 tenants, unstructured Teams and SharePoint sprawl, business records stored in personal OneDrive accounts, locally stored PST files, and partially decommissioned on-premises Exchange servers. These environments may function day-to-day, but they lack consistency and control.

Regulators and auditors expect structured retention, documented policies, and controlled access. A fragmented environment signals weak governance and increases scrutiny.

Metadata and context loss further amplify the risk.

• Metadata includes details such as who created a document, when it was modified, who accessed it, and its original location.
• Context preserves relationships between emails, attachments, threads, and custodians.
• Traditional export methods often strip metadata, flatten folder structures, and break communication threads.
• The content may remain, but the structure and narrative can disappear.

When structure is lost, authenticity and completeness become harder to prove. During litigation or regulatory review, that weakness can undermine an otherwise strong legal position.

3. What Needs to Be Preserved During an M&A Integration?

During an M&A integration, data tied to key custodians, legal obligations, and active risk exposure needs to be preserved, but not every file in the environment does.

Preserving all inherited data is expensive and disruptive. It increases storage costs, slows review processes, and creates unnecessary operational burden. Preserving too little, however, exposes the organization to accusations of negligence or spoliation.

Custodian-based preservation focuses on identifying key individuals, mapping their identities across systems, maintaining original metadata, and preserving communication context. This approach is especially important when employees move between tenants or identities change during integration.

Standard export methods often capture static snapshots without preserving identity mapping or record relationships. From a legal perspective, that approach is fragile.

Defensible preservation is not about copying files. It is about maintaining the integrity, traceability, and completeness of potential evidence.

4. Do Legal Holds Automatically Survive Tenant Changes?

Legal holds do not automatically survive tenant-to-tenant migrations or major system transitions.

Many organizations rely on Microsoft Purview to manage holds within Microsoft 365. However, during migrations from one tenant to another, from on-premises systems to the cloud, or across platforms, holds can become disconnected from the underlying data if not carefully validated.

Assuming that a hold will automatically follow the data is a governance mistake. If a hold breaks and relevant information is altered or deleted, the organization may face regulatory scrutiny, financial penalties, or claims of failure to preserve evidence.

Governance leadership requires active validation before, during, and after migration. Holds must be tested, documented, and confirmed to be enforceable in the new environment.

• Legal holds should be inventoried and mapped to custodians before migration begins.
• Postmigration validation should confirm that held data remains discoverable and protected from deletion.
• Documentation of hold continuity provides defensibility if preservation efforts are later challenged.

Technology alone does not guarantee continuity. Oversight does.

5. How Does Spoliation Risk Increase During M&A Transitions?

Spoliation risk increases during M&A transitions because systems are actively changing while preservation obligations remain in place.

Spoliation refers to the loss, destruction, or alteration of evidence that should have been preserved. Under Rule 37(e), courts assess whether reasonable steps were taken to preserve electronically stored information.

During integration, legacy systems may be decommissioned, administrative access may change, retention rules may be reconfigured, and data may be migrated under tight deadlines. Each action introduces the possibility that relevant information could be lost.

If preservation is incomplete when a legacy email server is shut down, historical messages tied to litigation could disappear permanently. Even accidental loss can carry consequences if reasonable safeguards were not in place.

This is where proactive governance matters most.

A structured, defensible transition model treats preservation, migration, archiving, and classification as connected responsibilities. The Cloudficient approach emphasizes structured preservation, defensible migration, archive continuity, and identity clarity from day one.

In the next part of this series, we will explore how this framework directly addresses the M&A data challenges outlined above and what a defensible transition model looks like in practice.

Conclusion

The real issue at the center of M&A data risk is responsibility.

Enterprise buyers are not simply acquiring companies. They are becoming stewards of inherited information with legal, regulatory, and reputational implications.

Without visibility into inherited systems, structured custodian-based preservation, and continuity of legal holds, even well-run legal teams can find themselves exposed.

When organizations treat inherited data as a core governance priority rather than a secondary IT task, they strengthen defensibility, reduce regulatory exposure, and protect long-term enterprise value.

Frequently Asked Questions

When should data due diligence begin during an M&A transaction?
Data due diligence should begin before close, so risks can be identified prior to migration or system shutdown decisions.

Who is accountable for inherited data after the deal closes?
The acquiring organization assumes full legal and regulatory responsibility for inherited information immediately upon close.

Can legacy systems be shut down right after migration?
Legacy systems should remain accessible until preservation, validation, and defensibility checks are complete.

Does moving everything into Microsoft 365 eliminate compliance risk?
Cloud platforms provide tools, but compliance depends on configuration, oversight, and governance discipline.

What is the most overlooked M&A data risk?
The most overlooked risk is assuming preservation and legal holds will automatically carry over during technical transitions.