How We Helped a Private Equity Firm Identify Cyber Risks Before an Acquisition
Client Background
A leading private equity (PE) firm approached us for assistance with cybersecurity due diligence as they were evaluating an acquisition target—a fast-growing technology company with significant intellectual property (IP) assets. The PE firm wanted to assess potential cyber risks that could impact valuation, legal liabilities, and post-acquisition integration.
The Challenge
The PE firm had a robust financial and operational due diligence framework but lacked the in-house expertise to evaluate the cybersecurity posture of the target company. They needed a fast, comprehensive, and risk-focused assessment to:
- Identify potential cyber threats and vulnerabilities.
- Assess compliance with industry regulations and best practices.
- Evaluate risks that could lead to financial, reputational, or operational damage post-acquisition.
- Provide clear, actionable recommendations for risk mitigation.
Our Approach
Understanding the client’s time-sensitive needs, we deployed a structured, efficient, and tailored cybersecurity due diligence process:
1. Rapid Cyber Risk Assessment
We performed a high-level risk assessment of the target company’s cybersecurity maturity, covering:
- Governance & Policies: Reviewed security policies, incident response plans, and regulatory compliance.
- Technical Controls: Assessed endpoint security, cloud security, network security, and access controls.
- Third-Party Risk Management: Evaluated vendor dependencies and supply chain risks.
- Data Protection & Intellectual Property Security: Analyzed data encryption, access controls, and data loss prevention measures.
- Breach History & Threat Exposure: Investigated past security incidents, ransomware exposure, and dark web monitoring for compromised credentials.
2. Hands-On Security Testing & Vulnerability Scanning
We conducted non-intrusive vulnerability scans and penetration testing to uncover exploitable weaknesses. Our ethical hacking team simulated potential attack scenarios that adversaries could exploit, providing real-world insights into security gaps.
3. Compliance & Regulatory Gap Analysis
Given the industry-specific regulatory requirements, we assessed compliance against:
- ISO 27001 Security Framework
- NIST Cybersecurity Framework
4. Financial & Legal Risk Mapping
We quantified the potential financial impact of cybersecurity risks, mapping them to legal liabilities, operational disruptions, and remediation costs. This provided the PE firm with a clearer picture of cybersecurity’s role in the overall deal valuation.
Key Findings & Insights
Our assessment uncovered several critical risks:
- Unpatched Critical Vulnerabilities: The target company had multiple high-risk vulnerabilities in their cloud infrastructure.
- Weak Access Controls: Inadequate identity and access management (IAM) led to excessive privilege escalation risks.
- Supply Chain Exposure: Third-party vendors had direct access to sensitive systems without robust monitoring.
- Data Leakage Risks: Lack of encryption and improper data retention policies posed compliance challenges.
- Incident Response Gaps: The target company lacked a well-documented and tested incident response plan.
The Outcome: Enabling a Confident Investment Decision
With our detailed report, the PE firm was able to: ✅ Adjust Their Valuation: Factoring cybersecurity risks into financial modeling ensured they accounted for potential remediation costs. ✅ Negotiate Risk-Based Terms: The firm leveraged our findings to negotiate better deal terms, including post-acquisition cybersecurity improvements. ✅ Develop a Cybersecurity Action Plan: Post-acquisition, our roadmap guided immediate remediation efforts, strengthening the security posture of the acquired company. ✅ Ensure Regulatory Readiness: With compliance recommendations in place, the PE firm reduced the risk of regulatory fines and reputational damage.
Why Choose Our Cybersecurity Due Diligence Services?
🔍 Deep Cybersecurity Expertise – Our seasoned cybersecurity professionals bring years of experience assessing M&A risks across industries. ⚡ Fast & Efficient Turnaround – We provide actionable insights within days, enabling faster deal decisions. 🔒 Risk-Based Prioritisation – We focus on high-impact risks that could affect valuation, compliance, and operations. 📊 Clear & Actionable Reporting – Our findings are delivered in executive-friendly formats, with risk scoring and strategic recommendations. 💡 Post-Acquisition Cybersecurity Support – Beyond due diligence, we help integrate security enhancements into the acquired company’s operations.
Let’s Strengthen Your M&A Strategy with Cyber Resilience
Cybersecurity risks can make or break an investment. Our cybersecurity due diligence services help PE firms gain full visibility into potential risks, ensuring they make informed decisions with confidence.
📩 Get in touch today to discuss how we can support your next investment.
