We have never done a formal cybersecurity audit or documented our data protection policies, but we know sophisticated buyers will scrutinize our IT security. How do we address cybersecurity risk on our exit runway without spending a fortune on enterprise software?

Question

Tyler Smith · Accepted Answer

Cybersecurity is no longer just an IT concern; it is a critical component of risk management that can stall or sink a business acquisition. During due diligence, sophisticated buyers will assess your data protection compliance, vulnerability to ransomware, and employee training. A single data breach or a lack of basic security protocols can lead to a significant price reduction or indemnity demands. You do not need an enterprise budget to mitigate this risk. Start by setting a quarterly Rock to perform an internal cybersecurity audit and document your basic data protection policies. Focus on the low-hanging fruit that security experts and buyers prioritize. First, implement multi-factor authentication across all company accounts, emails, and financial portals. Second, establish a formal password policy using a centralized password manager. Third, ensure that all employee devices are encrypted and running updated antivirus software. Next, document your IT security procedures as part of your Core Processes. This should include an incident response plan and a clear protocol for onboarding and offboarding employees to ensure immediate revocation of system access. Finally, integrate basic cybersecurity training into your employee onboarding process. When a buyer conducts their IT due diligence and sees that you have a documented security protocol, active multi-factor authentication, and a trained staff, they will see an operationally disciplined company with minimal digital liability. This operational clarity protects your valuation and ensures a smoother transition.