Finance

Changing Perceptions of a Troubled Trend in Private Equity

private equity trends

The performance in private equity firms has been misunderstood due to certain factors. Since private equity companies deal with a lot of buying and selling companies, they only have attorneys and accountants to handle multiple tasks. Most of their in-house expertise lies in identifying undervalued companies, analyzing financials, improving and selling companies, and making legal arrangements to make a purchase. However, there is no account where they’re using cybersecurity as the PE firm’s core competency.

Building a new understanding of PE firms

  • Caught between two fires

When such a situation arises, the private equity firm needs to conduct a press release on their companies (portfolio). This is the only way they can raise awareness that can help increase their number of buyers in their equity funds. Sadly, such press releases are leaving traces for hackers to fall in and follow PE firms that are cash-rich.

To fix this problem, private equity firms need to first address two concerns:

  1. They need to first conduct comprehensive cybersecurity before they get themselves involved in making a purchase. If they still follow the normal standard procedure, they’re just letting an IT consultant or a network operator check whether the target company has a Firewall. At times, changing the login password is not enough. That’s about it, a detailed set of security checks need to be run thoroughly and checked.
  2. Secondly, once the organization has made a purchase, the PE firm will need a set of standards that can protect the value of the fund. For instance, KKR is considered as one of the top PE firms across the world, and this firm has a buying worth USD 20 billion to buy companies based out of the U.S. now if there’s a hack that takes place across multiple companies that are already in the KKR fund, this can cripple the value of the fund to the investors.

A simple press release turning to a ransom

Private equity might issue a press release once the acquisition of a new company takes place, and perhaps another once they can make a profit.

This might just call in for trouble since the news has been out about the new portfolio company. Thus, a ransomware attack can easily hit the company. If such instances happen, these companies must pay the ransom for the ransomers, only then will their PCs and databases will be unlocked.

It is also seen that such PE firms have been an easy target for ransomware hackers.

Such companies tend to put a large amount of money in their businesses to improve business operations and maximize their value. In short, there are high chances that such companies will be able to pay the ransom. No wonder why they’re being targets of ransomware attackers.

On the other hand, since these companies are only made of accountants and lawyers, cybersecurity stands on their least of interest. One of the major reasons why they’re a target of vulnerable attacks of which the results could be damaging.

The experts should be called in

Not having efficient security could pose a threat to PE firms, of which in the long run could be fatal to the firm.

Simply said, setting up a security digital asset is no longer the sole responsibility of just the IT department. This should also be infused into the service and product offerings along with security. Besides this, cybersecurity should also be infused into business initiatives and developmental plans.

As private equity professionals, they need to have a clear set of cybersecurity best practices. This is the only way through which they’ll be able to overcome the risks of being victims of ransomware attacks.

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Ariaa Reeds is a professional writer who curates articles for a variety of online publications. She is currently working for TopCHRO(https://www.topchro.com/), an HR news and blog site that highlights best performing CHROs and HR professionals worldwide. She also has extensive experience writing on a diverse range of topics including business, education, finance, and technology.

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