Governance / CompliancePrivate equity / software acquisition3-week diligence window
Cyber due diligence that repriced an acquisition before signing
Mid-market PE firm acquiring a ~$40M vertical-software company
A private equity firm was days from a letter of intent on a vertical-software company when passive assessment surfaced exposed credentials, an unreported historical intrusion and an estate of end-of-life systems. The findings didn't kill the deal — they repriced it: remediation cost moved into the purchase price, cyber warranties into the agreement, and a 100-day security plan into the closing conditions.
Representative engagement — the client is confidential, and the figures and the quoted comment illustrate typical outcomes for the work described.
- Red-flag summary delivered
- day 6
- inside the deal team's decision window
- Material findings surfaced pre-signing
- 3
- including an unreported historical intrusion
- Remediation estimate negotiated into terms
- 7-figure
- priced into the deal, not inherited blind
- Post-close roadmap
- 100 days
- identity, network and monitoring integration sequenced
The challenge
- The deal team had financial and legal diligence covered but no independent view of the target's security posture.
- The target's data room presented a clean self-assessment with no third-party evidence behind it.
- The diligence window was three weeks, with the red-flag deadline inside the first.
What we did
- Ran passive external assessment of the target's estate — exposure, leaked credentials, breach-history indicators — with no contact with target systems.
- Reviewed the data room's security program evidence against what the external picture actually showed.
- Quantified the top risk scenarios as loss-exposure ranges so the deal team could negotiate in financial terms.
- Delivered the red-flag summary inside week one and fed the follow-up question set into the data-room process.
- Built the 100-day post-close integration roadmap covering identity consolidation, network separation and monitoring.
The outcome
- Findings moved directly into the negotiation: estimated remediation cost was reflected in the price, and cyber representations and warranties were strengthened.
- An unreported historical intrusion surfaced before signing rather than after, when it would have been the buyer's problem and reputation.
- The acquirer entered day one with a sequenced security integration plan instead of a discovery project.
“We price working capital risk, legal risk, customer concentration — pricing cyber risk the same way should have been obvious years ago. This paid for itself before the LOI.”