What cyber security for private equity actually means

Cyber security for private equity is the discipline of managing security risk as a value lever across the investment lifecycle, from diligence before a deal to remediation in the first hundred days, ongoing hold-period oversight and a clean security posture at sale. The fund is not securing one business, it is securing a portfolio of businesses that each carry different maturity, different regulators and different threat exposure. The work spans the deal team, the operating partners and the management teams of each company, and it has to translate technical risk into the language of value, multiples and reputation.

This sits apart from generic IT security advice because the buyer and seller dynamic changes everything. A weakness that would simply be a roadmap item inside a stable company becomes a price chip, a warranty exposure or a deal-breaker when value is being transferred. That is why cyber security consulting for funds reads more like commercial advisory than a controls checklist.

The pressures unique to private equity

Three pressures shape security in a fund. First, speed: deals move fast and security cannot be the function that slows a transaction or, worse, the one that gets skipped and surfaces a problem after completion. Second, leverage: portfolio companies often run lean, with thin or absent in-house technology leadership, so the fund inherits years of deferred investment and shadow systems. Third, concentration: a single ransomware event in one company damages that asset, but a pattern of weak controls across the portfolio damages the fund’s reputation with limited partners and acquirers.

Mid-market portfolio companies are a particular concern. They are large enough to be targeted and to hold valuable data, yet rarely mature enough to have invested in proper defence. That gap is exactly where a fractional leader earns the fee, and it is the same gap explored in our work on digital transformation in the mid-market.

Where the real risks sit

The headline risk is ransomware, because it converts a technical compromise into an immediate operational and financial crisis that a board cannot ignore. The IBM Cost of a Data Breach Report 2025 puts the global average cost of a breach at USD 4.44 million, and that figure lands hardest on a business already carrying acquisition debt. Beyond ransomware sit data protection failures, where regulators have shown they will act: the ICO fined British Airways £20 million in 2020 and Interserve £4.4 million in 2022, both for security shortcomings rather than any single dramatic event.

Funds should also weigh integration risk, where bolt-on acquisitions are connected to a platform company before anyone has checked the security of the thing being plugged in, and concentration risk, where the same managed service provider or the same unpatched system appears across several holdings. A clear-eyed view of these exposures is what separates a confident board from a surprised one, which is why we treat ransomware readiness and a tested incident response plan as portfolio standards rather than optional extras.

Security in the deal: diligence and the first hundred days

Security earns its place before the deal closes. Proper technology due diligence tells the deal team what they are buying: the state of the estate, the real cost to remediate, the regulatory obligations the target carries and any breach that has not yet been disclosed. That assessment feeds directly into price, warranties and the integration plan, and it stops a fund from inheriting a problem it could have priced.

After completion, the first hundred days set the tone. The priority is to close the obvious gaps quickly, stand up basic incident response, get visibility of what is actually connected and give the board a defensible view of risk. None of this requires hiring a full-time chief information security officer into a company that may not warrant one, which is the core argument for CISO as a service across a portfolio.

Regulation and the obligations funds inherit

Portfolio companies rarely arrive compliant. Data protection law applies to almost all of them, and sector rules add weight on top: a financial services holding faces supervisory expectations that a manufacturing business does not, a theme covered in our guidance on cyber security in financial services. For companies operating essential or digital services across the EU, the tightened obligations of the NIS2 regime now reach further into the supply chain and into management accountability, which is why funds with European exposure should read our note on NIS2 compliance.

Artificial intelligence has added a new strand. Portfolio companies are adopting AI tools faster than they are governing them, and unmanaged tools create data leakage and accountability gaps that a future acquirer will probe. Funds should set a baseline expectation for AI governance and watch for shadow AI creeping into operations before it becomes a diligence finding at exit.

How a fractional leader delivers it without a permanent hire

A fund does not need a chief information security officer in every company, and a permanent hire in each one would be both unaffordable and underused. A fractional or interim leader works at fund level and across the portfolio, setting a common standard, running diligence on new deals, leading first-hundred-day remediation and giving operating partners one consistent view of risk. This is the model behind a fractional CIO and CISO, and for companies that need the function on tap rather than in the building, a virtual CISO or virtual CIO arrangement covers both the technology and security mandate.

The commercial logic is straightforward. A UK chief information security officer salary runs roughly £95,000 to £600,000 or more, and that is for a single company. A fund can secure senior judgement across several holdings for a fraction of the cost of staffing each one, and our pricing and CIO and CISO cost calculator make that comparison concrete. The same leader closes the broader leadership void described in our piece on the interim CIO leadership gap, aligning security with IT strategy rather than treating it as a separate problem.

Why Starkhorn

Starkhorn is led by Daniel J. Jacobs, who has spent over 20 years in technology and security, 15 of them in leadership roles, including Interim Group Technology Director at VetPartners, the BC Partners-backed veterinary group, and CIO and CISO at Jardine Motors Group. He is the author of The Strategy Bridge and holds PRINCE2, ITIL Foundation and full membership of the Institute of Interim Management.

That combination of an interim technology role inside a private equity-backed group and a substantive CIO and CISO mandate at a national business means he has sat on both sides of the issues a fund faces, the operational reality inside a portfolio company and the security accountability a board expects.

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