Cybersecurity for Private Equity Firms: Reducing Risk and Adding Value

This article was published on Capital & Corporate on March, 2025.¹

For private equity firms in today’s digital landscape, cybersecurity has become a key pillar of sustainability and growth. Increasingly sophisticated cyber threats coupled with an ever-stricter regulatory framework compel these firms to rethink their strategy for mitigating risks while preserving — and even enhancing — the value of their investments. Robust cybersecurity is no longer optional but critical in the effort to ensure operational and financial stability.

Spain has become a prominent target for cybercriminals — the eighth most affected nation globally, with ransomware attacks increasing by 72% from 2023 to 2024.² This scenario endangers not only large corporations but also private equity firms, which manage highly sensitive and strategic financial information, and their portfolio companies. Social engineering remains one of the main attack vectors: In 2023, Spain ranked second globally in e-mail antivirus detection and 11th in spam sent worldwide.³

Cyberattackers deliberately target private equity firms for several reasons: These firms handle large volumes of critical financial and business data; publicise investments and acquisitions, information which can aid cybercriminals; and manage confidential information in key sectors like healthcare, technology and finance. Private equity firms often overlook cyber risk assessments in their due diligence processes, prioritising financial and operational audits over digital security reviews. Many of these firms also lack internal cybersecurity teams, relying instead on external providers or generalist IT staff. By exploiting these vulnerabilities, attackers can have a devastating impact on a firm’s profitability and reputation. A successful cyberattack affects financial results, jeopardises the investment’s value in the eyes of shareholders and regulators, and, in extreme cases, can hinder a potential initial public offering and reduce a company’s attractiveness to potential buyers.

In the past five months, the European Union has strengthened cybersecurity regulations through directives like the Digital Operational Resilience Act (‘DORA’) and Network and Information Security Directive 2022/2555 (‘NIS2’), affecting more than 33,000 companies in Spain. These regulations impose strict security requirements and severe penalties (up to €10 million or 2% of global annual turnover) for non-compliance. Moreover, liability extends to executives, who may face personal fines (up to €1 million), disqualification and even (in cases of gross negligence) criminal charges. Clearly, it is essential for private equity firms to adopt a proactive approach and ensure compliance with these regulations to avoid penalties and preserve investor confidence.

Attacks on private equity firms and their portfolio companies are not isolated cases. In recent years, phishing attacks and data leaks have threatened funds globally; in Spain, companies of all sizes are falling victim to significant cyberattacks. These incidents highlight the need to invest in security that protects digital assets and safeguards business continuity in an increasingly digital world.

Beyond regulatory compliance and risk mitigation, cybersecurity can become a competitive differentiator and a driver of value for private equity firms. A strong cybersecurity posture builds trust among investors and clients alike, enhancing market perception and increasing the company’s valuation. Implementing security measures reduces the need for costly ransom payments and minimises losses from attacks. Cybersecurity assessments prior to investment can identify critical vulnerabilities that may affect the purchase price or future exit strategies. The integration of digital security practices also contributes to operational resilience and adaptability to new technological and regulatory challenges.

To address these challenges, private equity firms should adopt a cybersecurity strategy structured across three levels. First, include cybersecurity in the due diligence process for every investment, and establish security protocols aligned with international standards. Second, develop contingency plans and have specialised teams ready to manage any cyber crises that may arise. Finally, as an imperative, use advanced threat detection tools and foster a culture of cybersecurity within portfolio companies.

Firms should also conduct pre-transactional assessments — including cybersecurity due diligence, maturity evaluations and intelligence analyses — in collaboration with experts to understand the risks inherent in each deal. Post-transactional support is also necessary in order to develop strategies for strengthening and implementing cybersecurity in acquired companies. In the event of cyber incidents, firms should have access to an efficient response service that helps protect their portfolio companies without individual investments in cybersecurity — activating the service on demand as needed.

In this way, private equity firms that integrate cybersecurity into their strategy will reduce risks while also strengthening their assets’ resilience and long-term sustainability. By proactively adapting to technological and regulatory changes, they can position themselves as leaders in an increasingly competitive and digitalised environment. Anticipating threats and investing in security not only protects investment value but can also unlock strategic opportunities that provide a competitive edge over other market players.

Cybersecurity is about more than just technology — it’s also about building trust among clients and partners. By demonstrating a consistent commitment to information protection and privacy, organisations create a secure environment that fosters long-term relationships and strengthens their market reputation.

When a company shows it takes information protection seriously, its partners feel more secure in their interactions. Transparency around security policies and incident management is also vital: Organisations that clearly communicate how they protect data and respond to security incidents can strengthen stakeholder relationships and trust. Cybersecurity should be seen not just as a protective shield, but as a growth driver and a source of confidence in today’s financial world.

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