Data Compliance Due Diligence In M&A Transactions

Cybersecurity and data-compliance due diligence has evolved from a routine risk-mitigation exercise into a decisive factor that can determine the success or failure of mergers and acquisitions involving Chinese targets. This article examines the legal framework underpinning that shift, identifies five core areas of diligence that buyers must scrutinise, analyses recent enforcement actions and landmark cases, and proposes contractual mechanisms to allocate compliance risks in transaction documents.

Introduction

Once a peripheral concern, cybersecurity and data compliance is now a central value driver – and a potential deal-breaker – in M&A transactions involving Chinese companies. This transformation is driven by a rapidly evolving regulatory landscape, which between 2016 and 2025, involved the promulgation of three foundational data-protection laws - one of which was substantially revised, the creation of a framework of implementation regulations and national standards, and the very