If you’re a private equity professional or deal counsel who’s skeptical about the value of cyber diligence, let’s just say that sentiment comes up… a lot. Cyber assessments weren’t built for deals. They’re too slow, too expensive, and too disconnected from what actually matters in a transaction. Generally, the result is a painful combination of seller frustration, bloated timelines, and reports that read more like academic papers than tools for negotiation. At best, cyber diligence has become a formality. But in most deals… it’s just skipped. And I don’t blame firms that decide to do so. This piece breaks down why that’s happening and how a better approach can turn cyber diligence into something more useful.

🔎Quick takeaway, before the coffee wears off 🔎
Traditional cyber diligence borrows too much from the world of enterprise audits – slow, exhaustive, and oddly disconnected with the priorities of a live transaction. This leads to reports full of detail but light on relevance. What deal teams actually need is a faster, sharper lens on material cyber risks… one that ties directly to valuation, terms, and post-close priorities. That’s the shift this piece explores.

I. What’s Wrong with Traditional Cyber Due Diligence

Lower and middle market transactions move fast. Traditional cyber diligence, on the other hand, insists on moving at the pace of a government audit. That mismatch isn’t accidental – it’s the byproduct of an industry that treats every deal like a Fortune 500 compliance review. What you get is a process that’s been optimized for frameworks, not outcomes.

Most diligence efforts lean on enterprise-level frameworks like NIST CSF or ISO 27001 – thorough tools, sure – but designed for ongoing cyber maturity assessments at large organizations, not M&A transactions. The reports they produce are dense with jargon, compliance scoring, and technical remediation recommendations but light on clarity about valuation impact or strategic risk. Investors are left squinting at security ratings trying to understand what it means for the deal.

The pace doesn’t help either. Most firms are already booked out running annual cybersecurity assessments for non-transactional clients... work that moves at a different pace and follows a very different playbook. Timelines can't flex because their methodology / framework won't. Maybe they'll offer to throw another junior analyst into the mix to hit your target timeline, but the result is the same... what should be a fast and focused assessment snowballs into a month+ wait just to get the report.  That time isn’t just inconvenient – it’s a drag on deal momentum, a liability in negotiations, and gives competing bids room to move in.

Then there’s the price tag. Because traditional models are structured around large frameworks, any effort to streamline the work would mean shrinking the engagement and their invoice. (Trust me, I've tried @ big firms) That’s a problem for big consulting shops whose business model depends on throwing junior staff at the problem for 125 hours. It’s why many lower and mid-market firms look at the five or six figure price tag and decide to skip cyber diligence altogether.

Even when investors do engage, they’re rewarded with volume, not clarity. Reports tend to be exhaustive… and exhausting. Buried somewhere in the 50 pages are the findings that actually matter, but then you have to clarify each item to ensure your team has a clear understanding.

And if the process feels painful on the buy side, it can be even worse for the sellers. Due diligence is already stressful for sellers / their team – but unfortunately the norm for most consulting firms is to hand interviews off to junior analysts armed with generic checklists… which only increases the friction. Suddenly your sellers are dealing with repetitive questions, misaligned priorities, and a lack of context that creates tension with management teams just as those relationships are becoming important.

In short, traditional cyber diligence has drifted from its purpose. It slows deals, clouds decisions, and strains relationships – all while delivering insights that are mostly too late to be useful. Cyber shouldn’t disrupt the deal. It should inform the model and only focus on material issues that impact the pricing / terms / R&Ws / etc. We’ll outline what that looks like next.

II. What M&A Professionals Really Need from Cyber Due Diligence

Cyber diligence shouldn’t be a box to check. It should be a strategic advantage for your firm and deal team – something that helps you move faster, negotiate smarter, and exit cleaner. That means cutting through the technical noise and getting the insights that matter most to your deal. Below is what that looks like when done right.

Rapid Identification of Material Risks:

The most common mistake we see in traditional cyber diligence? “Equal opportunity” reporting. Every vulnerability gets a line item – critical, high, medium, low, and even the lovely “informational.” In practice, that means your deal team ends up with a technical report that reads more like a dictionary than an output that informs your models.

Effective diligence doesn’t just tally issues – it filters through noise to highlight what’s important. Financial impact. Operational disruption. Reputational exposure. Then it delivers that insight quickly enough that the deal team can still act on it.

We once assessed a manufacturing company with more than 100 vulnerabilities. Most traditional analysts would have treated that as a win – based on the goal of normal cyber assessments, we had a lot of good findings. But most of these vulnerabilities were internal, buried behind layers of segmentation/other mitigating controls & protection. Thirteen IoT devices, however, were exposed to the open internet and missing patches for vulnerabilities previously used by ransomware groups targeting the manufacturing industry. That’s the signal. The rest? Eventually important…. but not deal-changing.

Before the cybersecurity purists start protesting: yes, everything should be patched. But let’s be clear – not everything belongs in front of the deal team.

Practical Quantification of Cyber Risk Exposure:

What’s the risk worth? That’s the question every deal professional wants answered… and one that almost every cyber diligence report I’ve ever seen fails to addresses. Let me be blunt: if cyber risk isn’t being quantified in financial terms, it shouldn’t be taken seriously by deal teams. No investment committee would accept a legal memo that lists 14 open contract disputes without estimating exposure, or a financial report that flags revenue recognition issues without quantifying the potential adjustment. Yet that’s exactly how most cyber diligence reads… pages of technical findings, color-coded for urgency, with no indication of how any of it impacts valuation, terms, or integration risk.

Using the FAIR methodology, cyber risk shifts from vague concern to quantifiable financial exposure… it becomes a lever for the deal. You’ve graduated from measuring wind with a wet finger to using an actual forecast model – one that investors can take seriously. A few Monte Carlo simulations later and you’re not just saying “there are a lot of critical vulnerabilities, this could be bad”… you’re saying, “95% of the ransomware scenarios remained below a $3M impact, but there’s a 5% chance this blows a $15M hole in the bottom line.”

This is the hill that I’m willing to die on: cyber diligence must rise to the same standard as legal and financial diligence. Until it does, our industry is failing its clients – and ensuring it won’t be taken as seriously as it should be. Cyber consultants: if you can’t say what the risk is worth, you haven’t finished your job. You’ve just added more noise to a room already full of it.

Portfolio Benchmarking for Smarter Diligence:

Most private equity firms lack consistent visibility into cyber risk across their holdings… and that gap weakens every new diligence effort. Without a clear baseline, every assessment starts from scratch, every finding exists in a vacuum, and every comparison is guesswork.

The root issue? Most of your portfolio companies use different cybersecurity vendors, each with their own playbooks and frameworks. One gets a 20-page ISO checklist, another a NIST-lite review, and a third walks away with a stack of PDFs from a regional MSP. The formats, the scoring, the depth – none of it lines up. Try making portfolio-level decisions from that chaos and you’ll find yourself flying blind. Try bringing in a reputable cybersecurity firm to conduct assessments across 10 portcos and you’re likely looking at a $300k price-tag with a 2+ month timeline.

But establishing a unified benchmark changes the game, which is why it's the first step in our process when working with most sponsors. Suddenly, you’re not asking whether a target is “secure” – you’re asking how it stacks up against your portfolio’s standard. Diligence becomes faster because you know what “good” looks like. Integration becomes easier because risk is already mapped. And your investment committee gains a clear, consistent lens for evaluating cyber posture – deal after deal.

No more reinventing the wheel. No more report translation exercises. Just structured, defensible insight that is built to inform both strategy and execution.

External Threat & Breach Intelligence:

Most diligence processes are built to ask internal questions: what tools are in place, what policies exist, what vulnerabilities do the systems have. But some of the most strategic signals don’t come from inside the company. They come from the outside… what’s already exposed, what’s been compromised, and what’s actively being targeted.

Effective cyber diligence includes an outward-facing lens. Not broad “threat intelligence” headlines, but focused, high-fidelity signals. Are corporate credentials circulating in breach forums? Are there mentions of targeting the organization’s executives? Has the organization been silently caught up in a third-party incident they haven’t yet discovered?

This isn’t about theoretical risk – it’s about exposure that’s already in motion. These signals don’t estimate probability… they confirm presence. Real credentials in breach forums. Real infrastructure exposed to attackers. Real incidents that may have already touched the business. Controls tell you how things should work. External threat data shows you what’s happening right now. It’s the highest-fidelity signal available in a cyber diligence process and the clearest path to uncovering material risks that actually matter to the deal.

Brand and Reputational Risk Assessment:

Not every cyber risk shows up as a vulnerability or on the dark web. Some of the most damaging issues are the ones targeting the company’s identity. Fraudulent websites, counterfeit products, or misuse of intellectual property – these aren’t technical gaps… they’re brand and legal landmines that are challenging to hunt down.

Traditional cyber diligence rarely touches this. The reports might mention a risk of reputational harm, but they don’t tell you whether that risk is already unfolding in the wild.

Effective diligence brings those issues to the surface. Are bad actors impersonating the company or its executives online? Are products being counterfeited or sold under their name? Are customers being misled or defrauded via fake messages? These threats may not trigger a firewall alert, but they can hit just as hard – through regulatory fines, customer churn, or litigation.

The goal of cyber diligence isn’t to blow up deals. That’s a common misconception – and one that rarely plays out in practice. But in one case, it did. During diligence on a consumer health company, we uncovered multiple high-volume e-commerce listings selling counterfeit products using the target’s branding and FDA-regulated packaging. These weren’t speculative threats – they were live operations, moving inventory under the company’s name. The findings were escalated to counsel for assessment within the broader deal context. The legal verdict was clear: enforcement would be slow, costly, and likely ineffective. The sellers were overseas, operating with clear intent and likely prepared to spin up new storefronts the moment one was shut down. The reputational damage, regulatory exposure, and lack of control over brand integrity tipped the scales in this case. The buyer walked. It wasn’t a technical failure. It was a brand risk – and a business risk – that couldn’t be justified once it was visible.

This type of assessment gives the deal team a clearer view of brand exposure and intellectual property risk – both of which carry significant weight in sectors where reputation is tightly tied to valuation. And when those risks cross the line from theoretical to actual, they need to be considered.

Each of these areas reflects what cyber diligence looks like when it’s built for deals – not audits, not checklists, but actual transactional risk. But getting there consistently isn’t easy and it’s not something most cyber consulting firms can achieve using their traditional playbooks. It takes a different approach, one designed specifically for the speed, precision, and pressure of M&A.

III. Cyber Screening: Cyber Due Diligence Built Specifically for M&A Investors

In this section, we outline our unique approach to cyber diligence and what makes us different from traditional cybersecurity firms. Cyber Screening is not a lighter version of traditional diligence – it’s a different model entirely. It’s built around a two-phased approach designed to prioritize speed, clarity, and relevance without dragging the deal into technical quicksand.

A Two-Phased Process, Built for How Deals Actually Work

Phase 1 is the screen – a fast, targeted assessment focused on identifying material cyber risks that could impact valuation, deal structure, or integration planning. It’s completed in 5–7 business days and gives deal teams immediate clarity on financial exposure, real-life threats, and overall risk posture. If no red flags are raised, the process ends there. You move forward with confidence and can include the cyber risk quantification component into your deal model.

If we do uncover meaningful risk? The process then escalates into a targeted deep dive. Phase 2 is where this deeper diligence happens, but only on the risks that justify it. Instead of running a full enterprise-grade audit across 108 cybersecurity controls, we only go deep where it matters: the ransomware controls, the SaaS app configuration issues, or the compromise that led to credentials being sold on the dark web. It’s precise, and again, only if the risks warrant it. Traditional cyber firms treat every deal the same way they treat a Fortune 500 assessment. Cyber screening treats every deal like a fast-moving deal… and that’s the point.

What Do You Get?

Most importantly, you partner with senior advisors who own the diligence process end-to-end. Our team isn't just showing up to present reports: we’re actively engaging your sellers when needed, assessing material risks, and providing strategic deal insights throughout the process. By design, our lean, M&A-focused approach allows us to truly act as a partner to our clients. In terms of outputs:

• FAIR-based Quantified Risk Exposure Model: Clearly articulate cyber risks in financial terms.
• Portfolio-Benchmarked Cyber Scorecard: Evaluate 15 critical controls against your existing investments.
• External Threat Snapshot: Quickly surface tangible threats and dark web signals.
• Transaction-Aligned Recommendations: Coordinated closely with your deal team and counsel, our insights extend beyond technical remediation to strategically inform deal-critical decisions.

What Does It Cost

Cyber Screening was built around a simple truth: most deals don’t need – and shouldn’t be pushed into – a cyber audit that starts at $30K, drags on for weeks, and rarely aligns with deal priorities.

Our phase 1 is priced at either $7,500 or $10,000, delivering fast, decision-ready insight without dragging timelines or inflating budgets. About 85% of deals stop here with no need for deeper work.

If material risks emerge then we escalate with precision. Phase 2 is scoped surgically and total costs, including Phase 1, typically fall between $25,000 and $30,000. This can be higher depending on scope.

I want to be clear: this approach is not about being cheap. It’s about aligning cyber diligence with the actual risk – and realities – of most transactions. Big consulting firms have bloated this process for years, building $50K reports for mega-funds while ignoring the needs of lower and middle-market deal teams.

How Much Seller Interaction Is Required?

Minimal. Phase 1 is built to run with little disruption to the target. When interaction is needed, it’s surgical – a one-hour interview, relevant, and respectful of the relationship. No long lists of generic questions. No dragging IT managers into unnecessary meetings. Phase 2 interaction varies based on the requirements of our findings.

IV. Common Cyber Due Diligence Pitfalls in M&A (and How to Avoid Them)

No two deals are the same and we understand that PE firms have varying opinions on how to manage cyber risk in their deals. Still, there are a few recurring assumptions I’ve heard over my career that deserve a closer look. Below are some common practices that can work under the right conditions… and where they tend to fall short.

Relying on Seller Disclosures For Lower Middle Market Deals:

In lower and middle-market deals, firms often rely on seller disclosures alone, assuming cyber risk isn’t material. But that’s a dangerous assumption. According to the National Cybersecurity Alliance, over 70% of attackers target small businesses and 66% have already experienced a cyberattack.

The reason is simple: smaller companies are easier targets for threat actors. They typically have limited security budgets, no dedicated cybersecurity staff, and weaker controls than the large enterprises that mega-funds are doing full-scale cyber diligence on. Sellers usually aren’t hiding risk – they just don’t have the tools or visibility to recognize it. At the end of the day, our experience shows that cyber risk exposure is disproportionately higher in lower and middle-market deals compared to larger transactions. Generally, the smaller the company, the weaker the cyber controls – and that lack of maturity dominos into greater financial exposure. Fewer defenses mean a breach is more likely… and weaker detection makes it harder to catch early, which often leads to more damage when it happens.

Relying on R&W Insurance:

Some firms lean on representations and warranties insurance as their fallback for cyber risk – a way to mitigate the risk with contractual coverage. That’s a valid strategy and the data highlights why. According to Lowenstein Sandler’s R&W Insurance Claims report, cyber and data security issues are now the second leading cause of claims, right behind financial misstatements (40% vs. 42%).

Here’s the disconnect... no serious buyer skips financial diligence just because they have R&W insurance. They understand it’s fundamental to pricing the deal and structuring terms. Cyber doesn’t carry that same weight in every transaction… and it shouldn’t. But that’s not a reason to treat it like an afterthought. The goal isn’t to treat cyber and financial risk as equals, it’s to apply a consistent approach to identifying and managing meaningful exposure. And R&W underwriters have caught on. Many now require independent cyber diligence before binding a policy or else they introduce exclusions that quietly strip out the very coverage buyers think they’re getting.

Balancing Speed and Strategic Depth:

Some deals warrant a deep dive. Highly regulated industries, prior breach history, or data-heavy platforms all justify a closer look. But starting there by default – as most traditional assessments do – is where things go sideways.

Comprehensive reviews across hundreds of controls slow down timelines, overwhelm deal teams with marginal findings, and often fail to differentiate between technical risk and transaction relevance. The result? Noise instead of key signals.

A better approach calibrates depth to risk. Start focused. Go deeper only if the risks found demand it. That’s how you preserve speed, avoid overkill, and keep diligence aligned with the actual structure and size of the deal.

Failing to Tie Cyber Risk to the Deal Itself

Most cyber diligence reports are packed with findings – but offer little guidance on what those findings actually mean for the deal. Are they pricing issues? Conditions precedent? Integration risks? Too often, it’s left to the deal team to translate technical language into financial and legal impact.

This is a missed opportunity. When risks aren’t quantified or tied to structure, they lose influence in negotiations. A critical vulnerability might deserve a $250k purchase price adjustment – or it might be immaterial. But if you can’t say what the risk is worth, it’s unlikely to affect the deal.
Cyber diligence should inform terms, not just check boxes. Without that connection, it’s just noise dressed up as thoroughness.

V. Moving Forward: Aligning Cyber Due Diligence with the Realities of M&A

Most cyber diligence today feels like a square peg jammed into the round hole of M&A. It wasn’t designed for speed. It wasn’t built for deal strategy. And it certainly wasn’t calibrated for the financial lens that defines every other part of due diligence.

That’s the disconnect cyber screening was built to solve.

This isn’t a lighter version of a heavy process… it’s a right-sized one. Fast enough to keep pace with the deal, sharp enough to quantify exposure, and strategic enough to align with valuation / structure / post-close execution. It respects the realities of the deal and the time constraints of everyone involved.

Everyone knows cyber risk isn’t going away. But with the right approach, it can go from being a blind spot to providing clarity and leverage. If that’s what your team needs, let’s talk.