Acquisition candidates are highly vulnerable. Mid-sized companies, the sweet spot of PE, tend to operate with lower budgets for their cybersecurity systems. At the same time, PE firms look to achieve growth and are keen to move at a fast clip.
As a consequence, there is a temptation to undervalue or completely overlook cybersecurity. This means most of these portfolio companies may fall into a category deemed “Cyber Risk Takers”.
Easy moves and small investments can make a big difference in exposure—financial, operational and reputational. Cyber Champions stop more attacks and face less disruption.
Cyber Risk Takers
Stop more attacks
Attacks that breach
1 in 2
1 in 6
Find breaches faster
% breaches found in <1 day
Fix breaches faster
% fixed in 15 days or less
Reduce breach impact
% breaches with no impact
Five steps to improve cybersecurity
Based on the experience serving 3,100 clients worldwide, we recommend five steps that can be taken to improve a portfolio company’s cybersecurity capabilities before deals are inked. This helps firms prepare for the expected spike in incidents and build cyber resilience as part of a strong digital core:
Rethink the cyber model
Building internal capacity is neither fast nor necessarily useful. Instead, have someone else do the blocking and tackling.
Improve how you approach due diligence
PE firms can limit their due diligence efforts to a week, to then double down on remediation opportunities before deal announcement.
Provide basic security hygiene
There are often quick wins that don’t require significant interventions yet increase the resilience of the portfolio company.
Reduce your blast radius
Not everybody should have access to everything. A quick review followed by one-time remediation prevents overly open access.
Ensure incident response readiness
Prepare for the worst with a tested response plan. The damage of an attack can oftentimes multiply because of misguided communication and uncoordinated action.
Increase resilience with ease and at speed
Cyber threats have raised the stakes for PE firms and their portfolio companies. Beyond any immediate costs, the reputations of everyone involved hangs in the balance. That’s the bad news.
The good news? Interventions can be catalyzed quickly and painlessly. And can be done before deals are closed, to prepare for a surge in cyberattacks, manage the risk and ensure speed to value.
Looking to improve cyber resilience for your portfolio while reducing your cybersecurity insurance expense? Accenture ranks first in cybersecurity service providers, employing more than 16,000 professionals globally.
We can help you stay on course to drive strategic value from your pursuits.
Frequently asked questions
Cyberattacks are attempts to steal, expose or outright destroy information through unauthorized access to IT systems. They are on the rise in every business sector. On average, companies face a 31% year-over-year increase in cyber incidents. Geopolitical instability, rapidly maturing and emerging technologies, and a lack of available talent compound the issue.
Private equity firms and their portfolio companies are alluring to cyber criminals. They hold a wealth of sensitive information, may fall into a category deemed Cyber Risk Takers and are known to have capital on hand. By increasing their performance to Cyber Champion levels, Cyber Risk Takers could reduce costs per successful attack by 65%.
For mid-sized companies, the average ransom paid is well over US$1 million. Nearly half of these companies lack cyber insurance and for those that do, insurance costs will likely go up after a claim. But there are other risks as well. The reputations of both the portfolio company and the private equity firm are at risk, value creation can be sandbagged, and—once paid—threat actors could come back to target the private equity firm itself or infiltrate other portfolio companies.
To build cyber resilience as part of a strong digital core, we recommend five steps that can be taken to improve a portfolio company’s cybersecurity capabilities before deals are inked. Rethink the cyber model; improve how you approach due diligence; provide basic security hygiene; reduce your blast radius; and ensure incident response readiness.