The Importance of Cybersecurity to Private Equity and M&A Firms: Part Two

In a previous post, we shared an Accenture study that cited the cyber risks faced by private equity (PE) and mergers and acquisitions (M&A) firms. Those risks are substantial. And they’re growing.

According to Cybercrime Magazine, the global cost of cybercrime is projected to reach $10.5 trillion by 2025. And it’s expected to increase by 15 percent a year thereafter, making it one of the greatest transfers of economic wealth in history [emphasis ours]. And according to Statista, the global cost of cybercrime is:

forecast to continuously increase between 2024 and 2029 by in total 6.4 trillion U.S. dollars (+69.41 percent). After the eleventh consecutive increasing year, the indicator is estimated to reach 15.63 trillion U.S. dollars and therefore a new peak in 2029.

This information reveals several important points to readers, some of which are sensible, others of which are quite alarming:

  1. Cybercriminals target PE and M&A firms because they’re treasure troves of confidential information, like investment data and financial reports that can be held for ransom or sold on the dark web.
  2. PE and M&A firms possess valuable intellectual property, such as business strategies, trade secrets, and proprietary information that also can be held for ransom or that can be sold to competitors.
  3. Cyberattacks can damage the reputations of PE and M&A firms — as well as their portfolio companies — at the price of loss of investor confidence, decreased valuation, and potential financial losses.
  4. PE and M&A firms are subject to compliance and regulatory mandates, such as GDPR, HIPAA, and SOX, which require them to securely maintain the confidentiality, integrity, and availability of sensitive data. Consequently, cyberattacks can lead to non-compliance and regulatory fines.
  5. Nation-state espionage actors may target PE and M&A firms to pirate financial data, trade secrets, or intellectual property that can be used to gain competitive advantages and/or disrupt global markets.
  6. Some cybercriminals may target PE and M&A firms as a result of political or ideological agendas. Such activity, called hacktivism, is intended to disrupt financial systems or to expose perceived injustices.

One More Note

The future of cybercrime and cybersecurity will be influenced to a growing extent by artificial intelligence (AI). It will be something of a horse race between the bad guys who employ it to do harm and the good guys who use it to protect others from the bad guys. With luck, the good guys will at least keep pace with — if not get a step ahead of — the bad guys.

We’re the good guys. Contact us and we’ll show you how we can help keep your firm, your data, and your reputation safe.

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Our experience with hundreds of businesses across diverse industries provides us with the expertise to understand your unique challenges.