Wire Fraud in M&A: A Hidden Risk That Can Drain Your Deal

Wire Fraud in M&A: A Hidden Risk That Can Drain Your Deal

M&A deals move fast—but cybercriminals move faster. Wire fraud is one of the most common and devastating financial scams that can hit M&A transactions, where large sums of money are exchanged under tight deadlines. If you’re an M&A advisor, investor, or business executive, failing to recognize the red flags of wire fraud could cost you millions and derail your deal.

How Wire Fraud Targets M&A Transactions

In the high-stakes world of M&A, cybercriminals exploit urgency, trust, and communication gaps to trick dealmakers into wiring funds to fraudulent accounts. Here’s how it happens:

🔹 Spoofed Emails: Scammers impersonate attorneys, CFOs, or trusted advisors, requesting last-minute wire transfers for "critical" deal-related payments.
🔹 Vendor Account Takeovers: Hackers infiltrate legitimate email systems, sending authentic-looking requests to update wire instructions.
🔹 Fake Executive Requests: Fraudsters pose as CEOs or dealmakers, demanding urgent wire transfers to "secure" an acquisition.

Once the money is sent, it’s usually gone for good.

What Can You Do? Implement Strong Controls

To protect your M&A transactions from wire fraud, you need written, non-negotiable security controls—known as a Written Information Security Policy (WISP). Here’s how to safeguard your deals:

✔️ Verify Wire Requests by Phone – Before approving any wire transfer, call the requesting party directly using a known, verified number—not one listed in an email.
✔️ Require Dual Authorization – Ensure that at least two people approve all wire transfers, especially for M&A-related payments.
✔️ Train Your Team – Educate your firm on recognizing phishing emails, spoofed domains, and last-minute payment requests.
✔️ Use Multi-Factor Authentication (MFA) – Secure executive email accounts to prevent unauthorized access.
✔️ Check Email Domains Carefully – Fraudsters often use slight variations of real domains (e.g., morganstanIey.com instead of morganstanley.com).

Cyber Insurance: Are You Actually Covered?

Most cyber insurance policies only cover up to $250,000 for wire fraud, and claims can be denied if your firm fails to follow security best practices. To ensure coverage:

📌 Implement a WISP – Insurers require written policies proving you took reasonable security precautions.
📌 Follow Secondary Authentication Procedures – If a second verification step wasn’t taken, your claim may be denied.

Protect Your M&A Deals Before It’s Too Late

Wire fraud is a silent deal killer, and waiting until it happens is too late. At A2Z Business IT, we help M&A advisory firms implement ironclad IT, security, and compliance controls to keep transactions safe from fraudsters.