Private Equity Has a Cyber Problem It Can't Diligence Its Way Out Of

For years, cybersecurity in private equity lived in one moment: due diligence. You ran a scan, checked a box, priced in a little risk, and moved on. That model is breaking.

A recent Kroll study found that 80 percent of PE firms experienced a cyber disruption during the hold period, and nearly 70 percent saw incidents rise year over year. The average impact was 2.1 million dollars per affected firm, and Kroll’s Dave Burg called that “just the tip of the iceberg.” The measurable cost is remediation. The hidden costs are delayed deals, regulatory investigations, and exit multiples that quietly compress.

Nineteen percent of firms had deals delayed by cyber findings. Eight percent took a valuation cut. The takeaway most operating partners have not absorbed: cyber is no longer an IT cost. It is a return driver.

And you cannot diligence your way out of it. Diligence is a photograph. A portfolio company does not sit still for three to five years: it integrates acquisitions, adds tools, changes staff, enters new regions. The attack surface you underwrote at close is not the one you carry at exit.

Risk is not a fact you establish once. It is a condition you manage continuously, or fail to.

Private equity is structurally set up to fail at this. Among smaller firms, 35 percent enforce no baseline controls, half still monitor manually, and most lean on managed providers company by company. Every portfolio company becomes its own island, with no consistent standard and no way to know which one is about to become a headline. The instinct is to add more: a fractional CISO here, another platform there. That does not scale across fifteen small companies, or on a fund’s budget.

Here is the reframe: security has become a value-creation lever. A company that can show a buyer real-time detection and response and a documented posture is worth more than an identical one holding a two-year-old audit. The value is not in avoiding one breach. It is in making every company in the portfolio provably defensible, all the time.

That takes a different operating model, not a bigger checklist: security operations that are continuous, uniform across the portfolio, and autonomous enough to run without a dedicated team at each company. Detection, investigation, and response at machine speed, applied everywhere you invest, with posture visible at the fund level. It is the shift we are building toward at Blacklight AI, and the one we apply to private equity and portfolio security.

The firms that feel this most are not the mega-funds, which already enforce baselines. It is the sub-billion-dollar firms running lean, where one incident can erase a year of value across a portfolio. That is also where the edge is: cyber maturity is becoming a differentiator in how funds win deals and protect returns, and most of the mid-market is not ready.

Cyber stopped being a checkbox at the deal table. It became a condition of ownership. The firms that internalise that will not just avoid the 2.1 million dollar surprises. They will exit cleaner, hold more confidently, and turn a cost into an edge.

Source: Kroll study on private equity and cyber risk, reported by Help Net Security, February 2026. Views are the author’s own.

Related reading: why the autonomous SOC was the wrong target and what agentic AI actually changes in the SOC.