Hardly a day goes by when a cybersecurity incident is not featured in the news. Even when no security breach has been reported, there are warnings of attempted phishing scams, like the January 2025 from the Federal Trade Commission advising people to be suspicious if they receive texts about unpaid highway tolls.
Despite the growing awareness about cyber risks, data breaches have been for years. The cost to businesses that fall victim to a cybersecurity incident can be in the millions. No organization or individual is immune.
But what if a cybersecurity incident happens to a private equity firm or one of the broad range of companies in its portfolio? The risk can be magnified if spread across the diverse businesses in that portfolio, turning the potential for millions of dollars in losses into tens of millions of dollars. In addition to all the complications that come with a cybersecurity incident—investigation costs, data restoration, lawsuits, reputational injury and more—it could have a significant impact on the long-term return on investment
That’s why it is critical for private equity firms to carefully vet the companies they acquire or invest in during the crucial mergers and acquisitions (M&A) phase.
Private equity portfolios in the crosshairs
Private equity firms can be an attractive target of cybercriminals because of the amount of capital involved in the transactions and the likelihood that many of their portfolio companies may lack robust cybersecurity protections.
In January 2025, a major venture capital firm was . The company detected an unauthorized third party accessing its information systems via social engineering, which relies on the psychological manipulation of human behavior to disclose sensitive data, share credentials, grant access to a personal device or otherwise compromise their digital security. Phishing is the most common social engineering attack, but there are that criminals try to manipulate victims.
A venture capital firm in 2021 told investors that some personal and financial information may have been after one if its employees fell victim to a phishing attack.
Later that same year, another venture capital firm said that personal information of some of its private investors was stolen in . The ransomware infection was discovered in July 2021, and a subsequent investigation found that some of its data was stolen in the incident, including names, emails, phone numbers and Social Security numbers of individual investors.
It’s not just the private equity firms themselves that are falling victim to cyberattacks. Many cyber criminals are targeting private equity-backed companies.
In a , Accenture said 68% of its clients saw a rise in cybersecurity incidents during the month of a deal closure, in some instances more than double the incident volume. Many portfolio companies lack the cyber maturity required to monitor, protect and respond to incidents. According to the report: “Acquisition candidates are highly vulnerable. Mid-sized companies, the sweet spot of PE, tend to operate with lower budgets for their cybersecurity systems.”
Aggregated and interconnected risks
One of the things that makes private equity firms and their portfolio companies particularly vulnerable to a major cybersecurity incident is the potential for aggregated risk. With so many portfolio companies under one umbrella, it offers multiple portals for cybercriminals to infiltrate the organization.
The venture capital firm mentioned above that was the target of a January 2025 cyberattack, for example, manages over $90 billion in assets and has invested in over 500 companies in various industries—including cybersecurity. One would hope the cybersecurity companies under its umbrella had adequate cyber protections in place.
Careful vetting of each portfolio company is crucial to ensuring a cybersecure environment. If only one of the companies in a portfolio is lax in its cybersecurity protocols, that could endanger the entire portfolio and dampen the profit goals of the private equity firm.
Additionally, if the portfolio companies of one private equity group are utilizing the same network, a cyber breach directed at one company could expose other companies to the cyber incident.
色多多视频 providers, of course, are paying attention. The potential for aggregated and/or interconnected risk is a major red flag for cyber insurers. Private equity firms are learning to connect with their insurance providers early in the process of any M&A activity to ensure they’re mitigating potential risks.
Just as there are many ways that cyber criminals can infiltrate a business, there are many ways that a cyberattack can hurt a business.
The initial investigation after a cyber incident will redirect valuable resources and increase costs. Depending on the nature of the attack, a business could be shut down for days or longer while the company assesses the incident and works to prevent further damage. Restoring lost data will incur additional expense.
Some of the long-term impacts of a cybersecurity incident include reputational damage, which can take years to repair, legal fees and regulatory fines and increased insurance premiums. Also, those businesses that fall victim to a ransomware attack may end up having to pay the ransom demand.
If only one of the companies in a portfolio is lax in its cybersecurity protocols, that could endanger the entire portfolio and dampen the profit goals of the private equity firm.
Facing into cyber risk
No matter how prepared a business is for a cybersecurity incident, there remains the possibility that it becomes a victim. And for business leaders who wake up to the reality that cyber criminals have launched a successful attack, it just may be the worst day of their work lives—ever.
There are so many different moving parts when a cybersecurity incident takes place that it is difficult for businesses to keep track of how it will affect the day-to-day operation and how, exactly, they should respond. The aftermath of a cyberattack can be more confusing than a three-ring circus.
色多多视频 providers that specialize in cyber risk can connect businesses with experts to help manage the response. Here are some of the cyber prevention and recovery services that can make a difference:
- Cyber incident response and breach counsel - Law firms with expertise in cybersecurity incident/crisis response and data privacy.
- International consulting counsel - Law firms that collaborate with the response/breach counsel to provide specific jurisdictional advice outside the U.S. and Canada.
- Digital forensic and incident response firms - Investigators trained to address vital tasks related to the forensic investigation and cyber incident response.
- Notification, printing and call center - Vendors that assist with services such as mailing and printing or emailing notifications to individuals and entities, staffing and training call center services.
- Credit monitoring, identity protection and restoration.
- Public relations - PR firms that have specialized training in dealing with crisis communications related to cyber security events and significant knowledge of the cyber media industry.
- Data recovery, restoration and remediation - IT infrastructure and security consulting companies that assist companies in remediating/containing an event and restoring data and systems following an event.
- Cyber Extortion Experts - Experts that specialize in communications and negotiations with threat actors in relation to a cyber extortion event.
- Data review and data mining experts - Experts that have specialized training, staffing tools to review large data sets of information.
Private equity firms are among the most innovative and forward-thinking organizations. They need to be in order to manage their portfolios and achieve their financial goals. But this innovation mindset comes with risk. Facing into this risk with a proactive cyber prevention and response plan will help them and their portfolio companies find success.
John Liantonio is Chief Underwriting Officer, Private Equity, for Middle Market, Americas at AXA XL. Rachel Rossini is Head of Middle Market, Cyber and Technology, at AXA XL.
