Key Takeaways
- • Limited partners intensify cybersecurity scrutiny during due diligence: 91% of PE fund CFOs report that LPs are asking very detailed or somewhat detailed questions about cybersecurity during due diligence, with 47% noting a measurable increase in investor inquiries over the past 12 months, according to the Private Funds CFO Insights Survey 2025 commissioned by PEI Group and RSM US LLP.
- • Cyberattack readiness has become a standard due diligence requirement: Two-thirds of surveyed CFOs indicate that LPs are always or sometimes asking questions about cyberattack readiness policies, underscoring cybersecurity's elevation to a core investment decision factor alongside traditional financial and operational metrics.
- • PE funds treating cybersecurity as mandatory risk management: 61% of CFOs surveyed view strong cybersecurity protocols as "must-haves" to a great extent in the eyes of investors, with 55% reporting increased investments in cybersecurity resources (both human and technological) over the past 12 months.
- • Portfolio visibility remains a critical gap: A lack of visibility into cybersecurity practices across portfolio companies presents one of the most significant operational challenges for PE funds, requiring collaborative strategies that translate technical cybersecurity findings into quantifiable deal costs and value impact.
- • Proactive risk management becoming table stakes: PE funds are now prioritizing robust risk assessments, business continuity planning, effective governance frameworks, and targeted protections against malware and ransomware as essential components of value preservation strategies.
Summary
Limited partners in private equity funds are exerting unprecedented pressure on general partners to strengthen cybersecurity oversight and risk management practices across their portfolio companies. According to the Private Funds CFO Insights Survey 2025—a collaborative effort between PEI Group and RSM US LLP polling over 120 finance leaders—cybersecurity has transitioned from a technical operational concern to a fundamental aspect of investment due diligence and value preservation. This shift reflects growing recognition among institutional capital providers that data breaches and cyberattacks pose material threats to portfolio company valuations and fund returns.
The survey reveals the scope of LP engagement on cybersecurity matters: 91% of PE fund CFOs report that limited partners are asking very detailed or somewhat detailed questions about cybersecurity during due diligence processes, while 47% have witnessed a measurable increase in such inquiries over the preceding 12 months. More significantly, two-thirds of respondents note that LPs are consistently or periodically asking about cyberattack readiness policies—an indication that cybersecurity resilience has become a material factor in investment committee approvals and fund selection.
In response to this investor pressure, PE fund management teams are materially expanding cybersecurity investments. Fifty-five percent of surveyed CFOs reported increased spending on cybersecurity resources—both human capital and technology infrastructure—over the past 12 months. Additionally, 61% of respondents indicate that strong cybersecurity protocols are viewed by investors as "must-haves" to a great extent, elevating cybersecurity from a compliance checkbox to a competitive differentiator in fund marketing and capital deployment.
However, a critical operational challenge persists: limited visibility into the cybersecurity maturity and practices of individual portfolio companies. PE funds are addressing this gap by implementing tailored cybersecurity programs scaled to match each portfolio company's operational complexity and risk profile. Industry experts emphasize that translating technical cybersecurity findings into tangible deal costs and adjustments to enterprise value remains a significant challenge requiring closer collaboration between technical security teams, financial advisors, and deal teams throughout the investment lifecycle.
The survey reveals the scope of LP engagement on cybersecurity matters: 91% of PE fund CFOs report that limited partners are asking very detailed or somewhat detailed questions about cybersecurity during due diligence processes, while 47% have witnessed a measurable increase in such inquiries over the preceding 12 months. More significantly, two-thirds of respondents note that LPs are consistently or periodically asking about cyberattack readiness policies—an indication that cybersecurity resilience has become a material factor in investment committee approvals and fund selection.
In response to this investor pressure, PE fund management teams are materially expanding cybersecurity investments. Fifty-five percent of surveyed CFOs reported increased spending on cybersecurity resources—both human capital and technology infrastructure—over the past 12 months. Additionally, 61% of respondents indicate that strong cybersecurity protocols are viewed by investors as "must-haves" to a great extent, elevating cybersecurity from a compliance checkbox to a competitive differentiator in fund marketing and capital deployment.
However, a critical operational challenge persists: limited visibility into the cybersecurity maturity and practices of individual portfolio companies. PE funds are addressing this gap by implementing tailored cybersecurity programs scaled to match each portfolio company's operational complexity and risk profile. Industry experts emphasize that translating technical cybersecurity findings into tangible deal costs and adjustments to enterprise value remains a significant challenge requiring closer collaboration between technical security teams, financial advisors, and deal teams throughout the investment lifecycle.
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