In a challenging financial landscape, management fees for private equity (PE) buyout funds have fallen to their lowest levels since 2005, as reported by Preqin. In today’s tough fundraising environment, fund managers are making unprecedented concessions on fees to attract investors, averaging just 1.74% of committed capital for funds closed or still raising money from last year. This trend, while advantageous to investors in the short term, creates a financial strain for PE firms, especially as the industry contends with rising cyber threats that require diligent attention and investment.
Striking a Balance Between Reduced Fees and Rising Cyber Threats
Today’s PE landscape is more vulnerable to cyberattacks than ever before. Companies in sectors like healthcare, technology, and finance—a significant portion of PE portfolios—have seen a dramatic increase in ransomware attacks, data breaches, and supply chain threats. Yet, with investors slow to reinvest and fees tighter, many firms face a dilemma: how can they protect their investments from growing cyber threats without stretching an already limited budget?
Cybersecurity incidents can lead to costly operational downtime, regulatory fines, and reputational damage. For PE houses, these risks can translate into reduced portfolio value and affect investor returns. This is especially problematic for smaller PE firms working with leaner budgets, which may not have the resources to implement extensive cybersecurity due diligence.
A Cost-Effective Solution for Cybersecurity Due Diligence
Firms like NorthCap Cyber offer a pragmatic approach to address this issue. By specialising exclusively in cyber risk due diligence for PE and VC firms, NorthCap Cyber provides streamlined and tailored cybersecurity assessments, helping PE firms manage cyber threats cost-effectively. In collaboration with globally recognised PE Houses, NorthCap Cyber has demonstrated its ability to offer comprehensive cybersecurity audits and ongoing portfolio risk management that aligns with PE’s commercial pressures.
How Cyber Due Diligence Empowers PE Firms
For investors in the PE space, ensuring cyber resilience doesn’t have to mean overhauling budgets. By partnering with specialised cybersecurity firms, PE firms can conduct due diligence in a way that minimises additional costs while maximising protection for their portfolios. NorthCap Cyber’s solutions are designed to deliver:
- Cost-Effective Risk Assessments: Tailored solutions that focus on identifying high-impact vulnerabilities and compliance risks without excessive overhead.
- Portfolio-Wide Protection: Proactive monitoring and cybersecurity improvements across the portfolio, offering assurances against industry-specific cyber threats.
- Streamlined Processes: Providing commercially empathetic, efficient assessments, allowing PE firms to maintain lean operations without sacrificing cybersecurity.
Investing in Cyber Resilience to Protect Long-Term Value
Even as PE firms contend with lower management fees, the importance of cyber due diligence remains high. Cyber attacks are becoming more sophisticated, with portfolios at risk of data breaches, ransomware, and regulatory non-compliance. Firms that can secure their portfolios against these threats will not only protect their current assets but also position themselves as resilient, responsible managers in an industry that demands proactive security measures.
In an era where every dollar must be maximised, NorthCap Cyber offer a viable, cost-conscious solution to safeguard investments, align with regulatory standards, and ensure that tighter budgets do not lead to higher vulnerabilities and greater risk of attacks. If you work in the investment arena and want a greater understanding of cyber risks to your existing or prospective investments, with an avenue to address them, contact the NorthCap Cyber team here.
