Identity Governance Challenges During Mergers and Acquisitions: What CISOs Must Know

In the high-stakes world of mergers and acquisitions (M&A), where organizations pour millions into due diligence, legal compliance, and operational integration, one critical area often remains dangerously underprioritized, identity governance challenges.

According to industry reports, over 70% of M&A cybersecurity failures are tied to poor identity and access management (IAM) during integration. When two organizations combine, so do their systems, applications, roles, permissions, and user identities. If these identities are not properly consolidated, governed, and secured, they become a fertile ground for insider threats, regulatory violations, and costly operational delays.

For CISOs, identity governance during M&A isn’t just a checkbox, it’s a front-line defense against chaos. In this blog, we explore why identity governance challenges become critical during M&A, the most common challenges organizations face, and how to mitigate risks using modern IGA strategies and platforms like CloudEagle.ai.

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TL;DR

1. Over 70% of M&A cybersecurity issues stem from mismanaged identity and access, CISOs must treat identity governance challenges as a mission-critical priority.
   
2. Lack of a unified view across both companies leads to shadow IT, inactive accounts, and insider threats.
   
3. Diverging IAM systems, RBAC vs. ABAC, and inconsistent workflows lead to compliance failures and operational disruption.
   
4. Manual reviews don’t scale, modern IGA tools like CloudEagle.ai enable automated discovery, deprovisioning, and policy alignment.
   
5. Involving HR, Legal, Security, and IT ensures identity governance challenges cover compliance, personnel changes, and access risks holistically.

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1. Why Identity Governance Challenges Becomes Critical During M&A

At its core, managing identity is about controlling access. And during a merger or acquisition, determining “who has access to what” becomes significantly more complex and risky.

When two organizations merge, their users (employees, contractors, partners) carry digital identities that are deeply woven into different infrastructure environments, each with unique access policies and permissions. Failing to reconcile these identities exposes both organizations to severe security and compliance risks.

Why It Matters:

• Data exposure: Misaligned access can expose confidential IP, customer data, or financial systems to unauthorized personnel.
  
• Operational disruption: If users can’t access what they need or worse, have access to what they shouldn’t, it slows down the integration process and productivity.
  
• Regulatory jeopardy: During this period of change, audit trails become harder to maintain, potentially breaching regulations like SOX, HIPAA, or GDPR.
  

Aligning identity, access, and entitlements before integration begins ensures smoother onboarding/offboarding, prevents unauthorized access, and lays the groundwork for a secure and compliant post-merger environment.

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2. Key Identity Governance Challenges in M&A Scenarios

During an M&A, organizations typically grapple with a host of identity-related challenges. Here are the top six areas CISOs must focus on:

A. Incomplete Visibility Across Systems

Disconnected IAM or IGA platforms across the two entities often result in a fragmented view of identity and access data. Add to this the proliferation of SaaS tools and third-party accounts, and you’ve got a visibility nightmare.

• Example: A finance SaaS tool used in one company may not be listed in the other’s asset inventory, yet both teams might be using it with different access roles.
  
• Consequence: This creates blind spots where dormant or risky accounts persist unnoticed.

B. Duplicate & Orphaned Accounts

When two companies merge, the same user may exist with multiple identities across systems especially in overlapping functions like HR, finance, or engineering. These duplicate accounts can lead to over-provisioning and increased risk.

• Orphaned accounts,belonging to ex-employees or former contractors, often remain active after layoffs or restructuring.
  
• Consequence: These accounts are prime targets for credential abuse or insider threats.

C. Inconsistent Access Policies

Most companies have unique access governance models, some use RBAC (Role-Based Access Control) while others leverage ABAC (Attribute-Based Access Control). Integrating these inconsistent policies is fraught with challenges.

• Different provisioning workflows and entitlement structures can conflict, resulting in either excessive access or unintended lockouts.
  
• Consequence: Poorly aligned policies can trigger non-compliance and degrade user experience.

D. Shadow IT and SaaS Sprawl

With both organizations likely using a myriad of SaaS applications, many unsanctioned by IT, the combined entity ends up with SaaS sprawl that’s difficult to track and govern.

• Consequence: Lack of centralized license ownership and usage data leads to budget waste and security gaps.

E. Compliance and Audit Gaps

During M&A transitions, maintaining compliance with frameworks like SOX, HIPAA, GDPR, and ISO 27001 becomes difficult. Without unified logs and control mechanisms, audit readiness is compromised.

• Example: Inconsistent audit logs across legacy systems make it difficult to trace user activity or validate data handling practices.

F. Delayed Deprovisioning & Risk of Insider Threats

Restructuring and layoffs are common post-merger. If deprovisioning processes are manual or misaligned, former employees may retain access to critical systems, sometimes for weeks.

• Consequence: Increased risk of disgruntled insiders exfiltrating data or sabotaging systems.

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3. The Consequences of Poor Identity Governance Challenges During M&A

Identity mismanagement during M&A doesn’t just cause minor hiccups, it has tangible, far-reaching consequences:

• Data Breaches & Insider Threats: Attackers thrive in transitional chaos. Poor visibility and over-permissioned users make it easy to exploit weaknesses.
  
• Regulatory Penalties: Failing to maintain audit trails or enforce access controls during the transition can invite heavy fines and reputational damage.
  
• Operational Inefficiencies: Manual reconciliation and ad hoc provisioning delay integration timelines and frustrate end users.
  
• Erosion of Trust: Stakeholders, internal teams, partners, even customers, begin to question the leadership’s ability to integrate securely and efficiently.

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4. How to Mitigate Identity Governance Risks During M&A

While M&A identity risks are complex, they’re not insurmountable. Here's how forward-thinking CISOs are addressing them:

A. Establish a Centralized Identity Inventory

Start with a unified inventory of all identities, roles, and access permissions across both organizations.

• Use discovery tools to scan for all accounts, employee, contractor, third-party, SaaS, on-prem.
• Categorize users by function, access criticality, and risk posture.

Outcome: A single source of truth that simplifies access decisions and policy alignment.

B. Automate Discovery and Reconciliation

Manual reviews are time-consuming and error-prone. Instead, leverage AI/ML-based IGA platforms to:

• Detect duplicate, orphaned, or inactive accounts.
• Reconcile entitlements across systems.
• Flag anomalous access behavior.
  

Outcome: Swift, data-driven remediation before threats materialize.

C. Harmonize Access Policies

Align the two entities’ access models (RBAC, ABAC, etc.) using common attributes like department, role, and clearance level.

• Apply least privilege principles during this transition.
• Standardize provisioning and deprovisioning workflows for consistency.
  

Outcome: Reduced risk surface and better auditability.

D. Prioritize Critical Systems and High-Risk Users

Not all identities are equal. Start with those that have the most privileged access, system admins, database owners, finance leads.

• Conduct targeted reviews and implement step-up authentication for critical roles.
• Monitor access to sensitive repositories like financials, IP, customer data, etc.

Outcome: Faster risk reduction without getting bogged down in low-priority cleanup.

E. Involve Security, HR, Legal, and IT Early

Identity governance challenges aren't just IT’s problem. Cross-functional collaboration ensures that all aspects - compliance, contracts, personnel, systems are considered.

• HR helps track personnel changes.
• Legal ensures regulatory alignment.
• Security leads to risk assessment.
• IT manages implementation.
  

Outcome: No blind spots, and a smoother path to Day 1 readiness.

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5. CloudEagle.ai Role in Securing Identity Governance Challenges During M&A

CloudEagle.ai offers a modern, AI-powered solution designed to address the Identity Governance Challenges & complexities of fast-changing environments like M&A.

A. Unified SaaS Access Dashboard

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• Provides a single pane of glass to view access, usage, and licensing across both merging entities’ SaaS environments.
• Instantly reveals shadow IT, third-party vendor access, and privilege escalation risks.
• Enables role-based visibility and filtering, so you can quickly answer, “Who has access to what—and why?”

Benefit: Prevent over-provisioning and enforce least-privilege access from day one.

B. AI-Powered Discovery of Shadow IT and Inactive Accounts

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• Continuously scans for unauthorized or duplicative SaaS tools, dormant user accounts, and entitlement creep.
• Uses machine learning to flag risky access patterns and recommend remediation.
• Identifies policy misalignments, such as admin privileges granted outside of RBAC definitions.

Benefit: Ensure that hidden risks don’t derail integration or introduce compliance liabilities.

C. Automated Workflows for Access Reviews, Provisioning, and Deprovisioning

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• Enforces Role-Based Access Control (RBAC) and supports Just-in-Time (JIT) access for sensitive or time-bound functions.
• Automates access certifications, provisioning, and offboarding in alignment with integration timelines and policies.
• Detects and revokes excess access dynamically especially during team restructuring or system consolidation.

Benefit: Maintain agility while minimizing manual errors and insider threats.

D. Audit-Ready Reporting for M&A Governance

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• Generates real-time, cross-entity compliance reports mapped to SOX, GDPR, HIPAA, and other frameworks.
• Tracks JIT access usage, policy violations, and access change logs with full traceability.
• Empowers CISOs, auditors, and compliance teams with up-to-date reporting across the entire SaaS stack.

Benefit: Speed up audits, ensure due diligence, and build stakeholder trust during high-stakes transitions.

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6. Conclusion

In today’s digital landscape, identity is the new perimeter and during mergers and acquisitions, that perimeter becomes dangerously fluid. For CISOs, mastering identity governance is no longer optional; it’s foundational to security, compliance, and operational success.

The risks of poor identity integration during M&A, ranging from insider threats to regulatory fines are too severe to ignore. Yet with the right strategy and tools, such as CloudEagle.ai’s AI-driven identity governance challenges platform, these challenges can be turned into opportunities for faster integration, stronger security, and more efficient IT operations.

Whether you’re preparing for a merger or deep in the trenches of integration, now is the time to reassess how your organization manages identity governance and its challenges. Because in M&A, who has access to what might just be the most important question you answer.

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FAQs

‍1. Why is identity governance especially important during M&A?

Because merging two organizations creates overlapping roles, conflicting permissions, and massive access risks. Without proper governance, this chaos leads to data breaches, regulatory fines, and operational delays.

2. What are the biggest identity-related risks during M&A?

Incomplete visibility, duplicate and orphaned accounts, inconsistent access policies, shadow IT, and delayed deprovisioning are common issues that increase the risk of insider threats and compliance failures.

3. How can CISOs ensure identity governance is handled correctly during M&A?

By creating a centralized identity inventory, automating discovery and reconciliation, harmonizing access policies, and involving key stakeholders across departments from the beginning.

4. What role does CloudEagle.ai play in M&A identity governance?

CloudEagle.ai provides AI-powered tools for SaaS access visibility, shadow IT detection, automated provisioning/deprovisioning, and compliance reporting, helping CISOs mitigate identity risk faster and more efficiently.

5. How soon should identity governance planning start in an M&A?

As early as possible, ideally during the due diligence phase. Identity issues can’t be an afterthought; they must be integrated into the broader risk, IT, and compliance strategy from Day 0.

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