PE Portfolio Cybersecurity Guide

A working reference for sponsor operating partners and portco CFOs: what buyers actually check, how cybersecurity moves enterprise value and what the first 100 days post-close look like.

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Lower-middle-market PE deal velocity picked up across 2024 and 2025, and cybersecurity diligence moved with it. A 2020-vintage diligence memo asked 3 questions about IT. A 2026-vintage memo from a credible sponsor asks 40 to 60. Cybersecurity moves enterprise value 2 to 10 percent in typical mid-market transactions, with retrade and escrow demands clustering around the same 5 to 7 control gaps year after year. This guide answers 24 of the questions sponsor operating partners and portco CFOs ask most often before, during and after a transaction.

In this guide

1. How sell-side cyber diligence works
2. What buy-side diligence actually checks
3. Cybersecurity and enterprise value
4. Post-close 100-day plan and carve-out work
5. Working with deal teams and Atticus Rowan

How sell-side cyber diligence works

Cyber diligence is no longer a check-the-box review. Mid-market sellers who treat it as a 6 to 12 month preparation window keep leverage. Sellers who wait until LOI signature lose it.

What is cybersecurity diligence in a mid-market PE transaction?

Cyber diligence is the structured review buyers run on a target's security program before close. A 2026-vintage diligence memo typically covers 40 to 60 questions across documented program, MFA and EDR posture, backup and recovery, incident history, vendor risk, cyber insurance and regulatory posture. Buyers want evidence the program is real, not implied. Vague answers slow deals or produce retrade demands.

When in the deal cycle does cyber diligence happen?

Cyber diligence typically opens after LOI signature and runs through closing. Sponsor operating partners or a third-party diligence firm coordinate the workstream. The information request is staged: framework alignment and policy first, technical artifacts next, incident history and renewal-cycle evidence last. A typical timeline is 3 to 6 weeks. Confirmatory diligence can extend if material gaps surface.

How early should sellers prepare for cyber diligence?

6 to 12 months before a planned exit is the ideal preparation window. Sellers who wait until LOI signature compress remediation into the worst possible window. The first 90 days build the documentation library: written security policy, IR plan, asset inventory, network diagram, vendor inventory, training records. The remaining time closes the high-impact gaps so diligence answers reflect real posture, not hopeful posture.

What evidence library should sellers maintain?

A defensible library covers: written information security policy, IR plan with last-tested date, business continuity plan, asset and identity inventory, network diagram, MFA enforcement attestation, EDR coverage report, backup verification logs with most recent successful restore, vendor risk inventory, training completion records and any prior assessment against NIST CSF or CIS Controls. Maintain dated copies refreshed monthly.

What sell-side gaps cause the most retrade pressure?

The recurring patterns: incident-history surprises, MFA gaps on privileged accounts, EDR coverage below 95 percent on managed endpoints, immutable backup absent, missing or untested IR plan, cyber insurance lapses or material exclusions and undocumented vendor access. Each individually moves modest dollars. Two or more compounding can move 1 to 4 percent of enterprise value.

What buy-side diligence actually checks

A 2020 diligence memo asked 3 questions about IT and moved on. A 2026 memo from a credible sponsor asks 40 to 60. Buyers expect evidence, not assertions, and they verify the gap between the two.

What is in a 2026 cyber diligence questionnaire?

A current questionnaire covers 6 areas: program governance (policy library, framework alignment, training), preventive controls (MFA, EDR, patching, segmentation), detection and response (SIEM or MDR, IR plan, last tabletop), recovery (backup architecture, tested restores), vendor risk (third-party inventory, BAAs where applicable) and cyber insurance (in-force policy, application accuracy, exclusions). Each area expects evidence, not assertions.

What technical artifacts do buyers request?

Common requests include: a current network diagram with trust boundaries, identity-provider configuration export sanitized for review, EDR coverage and detection report, MFA enforcement audit, backup verification logs, last 12 months of patch compliance reports, vulnerability scan output and SOC reports if any. Sellers who can produce these in days look operationally mature. Sellers who cannot lose negotiation leverage.

How do buyers verify cyber insurance posture?

Buyers review the in-force policy and the most recent application. They verify the application's control attestations against actual posture. If the application says MFA is enforced everywhere, buyers verify enforcement on remote access, the VPN, ERP and privileged accounts. Misalignment between attestation and reality is a meaningful diligence finding because it implies the policy may not respond to a claim.

What incident history is reviewable?

Anything material in the prior 24 months: ransomware, business email compromise, wire fraud attempts, unauthorized access events, regulatory notifications, customer breach notifications. Buyers review SIEM data, email-security alerts, helpdesk tickets coded as security and any post-incident reports. Undisclosed incidents found during diligence are the highest-impact retrade trigger because they suggest broader concealment.

How deep does cybersecurity diligence go at lower-middle-market?

Diligence depth scales with deal size. A $25M to $75M revenue target typically gets a 40-question questionnaire, a 2 to 3 hour management interview and document review. A $75M to $250M target gets a 60-question questionnaire, a half-day interview, third-party network or pen testing and detailed evidence review. Depth also scales with industry: regulated targets in healthcare, financial services and defense supply chain get more.

How do operating partners interpret diligence findings?

Operating partners triage findings into 3 buckets: deal-breaking (no immutable backup, active intrusion, undisclosed incident), price-affecting (material control gaps, weak insurance, stale IR plan) and post-close work (documentation gaps, framework alignment, enhancement projects). The last bucket goes into the 100-day plan rather than the SPA. Skilled operators close diligence with a clear list of what is in scope post-close and what is conditional.

Cybersecurity and enterprise value

Cybersecurity rarely produces a multiple uplift on its own. It enables faster close, fewer retrade conversations and stronger negotiation leverage on other terms. The presence is invisible. The absence is loud.

How much does cybersecurity actually move enterprise value?

Cybersecurity posture typically moves enterprise value 2 to 10 percent in the lower-middle-market. A clean posture supports premium pricing and faster closes. A weak posture produces escrow increases, retrade demands or occasionally deal failure. The variance is narrower at smaller deals (the absolute dollar magnitude is smaller) and wider at $100M+ revenue where buyers price cyber as a material risk category.

Can a clean cyber posture support a premium multiple?

A clean posture rarely produces a multiple uplift on its own. It enables faster close, fewer retrade conversations and stronger negotiation leverage on other terms. Premium multiples are produced by financial performance, market position and growth. A clean cyber program supports the premium by removing reasons buyers would discount it. The presence is invisible. The absence is loud.

What posture issues commonly trigger price adjustments?

The recurring triggers: undisclosed incident in 24-month look-back, control attestations that do not match reality, missing immutable backup, EDR coverage below 95 percent, IR plan untested or stale by more than 12 months, expired or weakly underwritten cyber insurance and undocumented vendor access. Two or more in the same target typically produce 1 to 4 percent retrade or matched escrow demand.

What value-creation work is most defensible to a buyer?

Buyers credit work that is documented, independent and recent: framework alignment to NIST CSF 2.0 or NIST 800-171, a SOC 2 readiness program (we are not a SOC 2 audit firm ourselves; we are the MSP that makes the audit reach a clean opinion), tested IR plan with documented tabletop output, a complete vendor risk inventory and a maintained evidence library. Self-reported posture without artifacts is weighted lightly.

Post-close 100-day plan and carve-out work

The 100-day plan is the bridge between closing day and steady-state operations. Carve-outs add a parallel build workload because the target inherits nothing from the parent on close.

What does a 100-day post-close cybersecurity plan look like?

A standard 100-day plan runs in 3 phases. Days 1 to 30: assess (asset, identity, backup, insurance, incident, regulatory and vendor inventories) producing a gap inventory legible to the CFO. Days 31 to 60: stabilize (close highest-severity gaps, close insurance attestation gaps, harden executive accounts). Days 61 to 100: execute (framework alignment, policy library, tabletop, vendor risk and sponsor reporting cadence).

What is different about carve-out cybersecurity work?

Carve-outs inherit nothing from the parent on close. The target operates inside parent shared services until the transition services agreement expires. During the TSA window, the standalone build runs in parallel: identity provider, email tenant, network, endpoint management, security monitoring, backup and ITSM. The work is bigger than a typical platform build because the deadline is fixed and the cutover is binary.

How does TSA exit interact with cybersecurity?

Every parent-provided service has a security boundary. Email transitions, identity migration, file-share migration and ITSM transition each have their own evidence, downtime windows and rollback plans. We support a lower-middle-market PE portfolio company we carved out from its publicly-traded industrial-services parent operator. The TSA-period workload was the heaviest in the engagement because identities, devices, data and integrations all changed at once.

What evidence does a sponsor want at days 30, 60, 100?

Day 30: prioritized gap inventory with severity and remediation estimate. Day 60: signed attestation that critical controls are in place with evidence (MFA, EDR, immutable backup, IR plan, cyber insurance alignment). Day 100: board-ready cybersecurity program document covering framework alignment, policy baseline, tested IR plan, vendor risk baseline and the quarterly reporting cadence the operating partner will receive going forward.

What ongoing cadence do sponsors expect from portcos?

A typical sponsor cadence is monthly operational reporting (control posture, incidents, top risks, remediation status), quarterly executive review (program metrics, framework alignment progress, insurance posture, tabletop output) and annual strategic review (program maturity, cluster gaps, exit-readiness posture). Sponsors who do not see this cadence assume the program is informal. Documented cadence is itself a value signal at the next exit.

Working with deal teams and Atticus Rowan

Counsel handles legal exposure. Brokers place coverage. Atticus Rowan operates the program the diligence memo describes. The roles do not overlap and all 3 are necessary on a credible deal.

When should sponsors engage Atticus Rowan?

Three common engagement points: pre-LOI for sell-side preparation, between LOI and close for buy-side diligence support, or at close for the 100-day plan and ongoing portco operation. The earliest engagement produces the most leverage, since gap-closure compounds across diligence answers, retrade exposure and post-close stabilization. Engagements are scoped per organization with the 30-day assessment as the entry point.

What does an Atticus Rowan PE engagement include?

A typical engagement covers gap assessment against a current diligence questionnaire and the firm's chosen framework (NIST CSF 2.0 or NIST 800-171 most often), remediation of MFA, EDR, backup, IR and insurance gaps, documentation refresh, evidence library setup, diligence and renewal support during the deal window, the 100-day plan post-close and ongoing reporting cadence to the operating partner.

How does Atticus Rowan coordinate with deal counsel and brokers?

We coordinate with deal counsel on representations, warranties and disclosure schedule items related to IT and security. We coordinate with cyber insurance brokers on application support and renewal cycles. We coordinate with operating partners on diligence response, 100-day deliverables and ongoing reporting. Each role stays in lane: counsel handles legal exposure, brokers place coverage, we operate the program.

What outcomes do sponsors typically see from PE-aligned MSP work?

Practical outcomes vary by starting posture, but typical engagements produce: a clean diligence response with no surprises, a closed 100-day plan with documented evidence, stable or reduced cyber insurance premium at first renewal, a quarterly reporting cadence the operating partner trusts and a maintained evidence library that supports future diligence (add-ons, refinancing, exit). The library compounds across the hold period.

Deal in motion?

If you are evaluating a target, preparing a portco for sale or running a 100-day plan post-close, schedule a conversation. We can walk through current posture, identify the gaps that move price or escrow and scope what a credible cybersecurity workstream looks like inside your deal timeline.

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