Cybersecurity: A Strategic Lever for Business Value

Kevin Smith

A recent breach at Discord, which exposed 70,000 users’ photo IDs, underscores a critical truth: no business is immune to cyber threats. Yet cybersecurity isn’t just a defensive measure — it’s a strategic asset that can significantly enhance enterprise value.

As investor attention gravitates toward AI-driven ventures, non-AI businesses face mounting pressure to differentiate themselves. A robust cybersecurity posture offers a compelling way to stand out, especially for organizations preparing for a sale. Buyers, too, should prioritize cybersecurity during due diligence, as it directly impacts valuation and deal stability.

Why Cybersecurity Matters in M&A

For companies planning to enter the market within one to three years, cyber risk is a major vulnerability. A breach during the sale process can derail negotiations or force buyers to renegotiate terms. Think of cybersecurity like a home inspection: both buyers and sellers must evaluate past breaches and ongoing liabilities. Even with a clean history, the reality is that attacks are inevitable — and firms with stronger defenses present lower risk and higher value.

Cyber readiness also influences product launches and client trust. Vendors offering enterprise SaaS solutions, for example, are expected to meet standards such as SOC attestation or HITRUST certification. In today’s environment, these credentials are table stakes.

Five Steps to Elevate Valuation Through Cybersecurity

1. Engage a Cybersecurity Advisor
   Cybersecurity is multifaceted. External advisors provide essential guidance, penetration testing, and audits to align your business with recognized frameworks.
2. Appoint a CCO or Fractional CCO
   A dedicated cybersecurity leader signals commitment. For smaller firms, fractional roles deliver expertise without the overhead of a full-time hire.
3. Assess Current Defenses
   Conduct penetration tests, SOC audits, or HITRUST readiness assessments to identify gaps and prioritize improvements.
4. Implement a Cybersecurity Framework
   Choose a framework suited to your industry and business model. Update policies, strengthen data governance, and embed cybersecurity into company culture.
5. Secure Cyber Insurance
   Even the best defenses can’t eliminate risk. Insurance mitigates financial exposure and demonstrates responsibility during transactions.

Selecting the Right Framework

• SOC 1 or SOC 2: Ideal for software companies; requires formal audits for attestation.
• HITRUST: Best for organizations handling sensitive personal data, such as healthcare providers.
• ISO 27001: A strong fit for manufacturing firms seeking global standards.
• BSA/AML Audits: Bank Secrecy Act (BSA) and anti-money laundering (AML) audits are essential for financial institutions to maintain compliance.

Review client RFPs to determine which certifications align with market expectations.

Overcoming Internal Resistance

Cyber initiatives often take a back seat to immediate operational fires — until a breach becomes the fire. Reframe cybersecurity as a value driver, not a cost center. Risk modeling can help quantify potential losses versus the benefits of a hardened posture.

Bottom line: Cybersecurity isn’t an IT issue; it’s a financial imperative. Strengthening defenses today can translate into higher valuations tomorrow.

Kevin Smith is partner at Wipfli. Need guidance? Wipfli offers advisory services to help businesses enhance cybersecurity and maximize transaction value.