Door Sean Tilley, EMEA Senior Director of Sales bij 11:11 Systems
In de dynamische wereld van private equity (PE) is het uiteindelijke doel duidelijk: de waarde van portefeuillebedrijven maximaliseren om een zo hoog mogelijk investeringsrendement te behalen. Dit vereist een veelzijdige aanpak, waarbij operationele efficiëntie, financiële groei en de strategische koers allemaal belangrijke onderdelen zijn.
One often overlooked, but critical, aspect to the success of these investments is operational resilience.
Operational resilience, particularly in the areas of security services and disaster recovery as a service (DRaaS), is critical to safeguarding the long-term value of portfolio companies. In today’s environment of constant cyber threats such as phishing, ransomware, and unforeseen disruptions, PE firms must ensure their portfolio companies are prepared for and able to weather the worst.
Navigating an Evolving Risk Landscape
The risk landscape for businesses has changed dramatically in recent years. Cyber threats, ransomware attacks, data breaches, natural disasters, and global pandemics have become part of the new normal. The potential impact of these risks on portfolio companies is significant. A major cyberattack or prolonged operational disruption could result in significant financial losses, reputational damage, and in extreme cases, the complete demise of a business.
Value-driven private equity firms cannot afford to ignore these risks. Having robust security measures and a comprehensive disaster recovery plan in place for portfolio companies is no longer optional, it is imperative.
Protecting and enhancing portfolio value
Operational disruptions can result in direct financial losses, but the indirect effects can be just as damaging. For example, a security breach can erode customer confidence, lead to regulatory fines, and significantly reduce interest in a company from potential buyers. For PE firms looking to sell or divest a stake, this can reduce the valuation of the company, reducing the overall return on investment.
In contrast, companies that demonstrate strong operational resilience are more attractive to potential buyers and partners. They are seen as safer investments because they are able to withstand and recover from crises. This resilience protects and can even increase the current value of the company, resulting in higher valuations when selling stakes.
Cybersecurity as a cornerstone
Cybersecurity is at the heart of operational resilience. With the increasing digitalisation of business processes, exposure to cyber risk has never been greater. PE firms should ensure that their portfolio companies have invested in cyber resilience, including advanced security services such as threat detection, incident response and continuous monitoring.
By taking a proactive approach to cybersecurity, firms can identify vulnerabilities before others exploit them and respond quickly to any incidents. This not only minimises potential damage, but also demonstrates a firm’s commitment to protecting customer data and operations, which are key factors in maintaining a company’s reputation and value.
Furthermore, failure to comply with data protection legislation such as GDPR can result in significant fines and legal implications. PE firms should ensure that their portfolio companies comply with all relevant regulations, as failure to comply can result in financial penalties and reputational damage.
The Importance of Disaster Recovery
Cybersecurity is crucial, but it is only one piece of the operational resilience puzzle. PE firms should also consider how their portfolio companies would recover from a catastrophic event, such as a natural disaster, a major cyberattack or a systems failure. This is where Disaster Recovery as a Service (DRaaS) comes into play.
DRaaS is a cloud-based solution that ensures that a company’s data and critical IT systems can be quickly restored after an interruption. This reduces downtime, minimizes data loss and ensures that business operations can continue with minimal disruption. PE firms that invest in DRaaS for their portfolio companies ensure that the companies can weather any storm.
Another key benefit of DRaaS is that it offers a cost-effective solution. Traditional disaster recovery solutions often require large capital investments in redundant infrastructure and dedicated fallback locations. DRaaS, in contrast, leverages the cloud and offers a scalable, flexible solution that can be tailored to the specific needs of each portfolio company. This keeps costs low and enables a faster and more efficient recovery, further increasing the company’s operational resilience.
Operational resilience as a competitive advantage
In today’s fast-paced and unpredictable business world, operational resilience isn’t just a defensive strategy; it’s a competitive advantage. Companies that can demonstrate strong resilience are better positioned to acquire new customers, retain customers, and attract investment. For PE firms, this translates into higher valuations, more successful exits, and ultimately higher returns on investment.
By ensuring that portfolio companies have the necessary investments in security services and DRaaS, PE firms can protect their investments from unforeseen risks and increase their market value. In a world where operational disruptions are becoming more common, the ability to not only survive challenges but also continue to perform strongly is a metric that differentiates the most successful portfolio companies and their investors from the rest.
A Strategic Imperative for PE Firms
Operational resilience should be a top priority for any PE firm looking to maximize the value of its portfolio. By ensuring that their portfolio companies have robust security services and effective disaster recovery solutions in place, PE firms can protect themselves from potential threats and position their investments for sustainable growth and success. Ultimately, the return on investment of operational resilience is measured not only in financial terms, but also in the long-term stability, confidence and viability of the portfolio companies themselves.
