Cybersecurity Best Practices for PE-owned Companies

Investing in cybersecurity to reduce risk during the PE holding period.

The due diligence period during a private equity buyout often exposes gaps in the target company’s cybersecurity capabilities.  Only 27% of management teams feel confident their organizations are cyber resilient, according to the World Economic Forum. 

A sponsor-backed cybersecurity strategy is critical to reducing risk during the PE holding period. This is particularly true of middle-market companies, which often lack their own cybersecurity capabilities. The following are some areas pertaining to cyber security that leading private equity firms have built in-house capabilities for or are at least able to consult on for portfolio companies.

Recruitment of Cybersecurity Experts: The first line of defense against cyber threats is the presence of skilled cybersecurity professionals within each portfolio company. Many lower- and middle-market companies lack the necessary expertise to source and evaluate such critical talent effectively. Thus, operating partners play a pivotal role in bridging this gap. They are tasked with identifying and recruiting semi-sufficient or fully qualified cybersecurity experts who can not only manage cybersecurity issues but also collaborate on various projects. This partnership ensures that cybersecurity measures are not just theoretical but are applied and practical, safeguarding the company's digital assets.

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