Protecting Your Business Value: Why Cyber Security is Critical in a Post-Capital Gains Tax Hike Era

The recent increase in Capital Gains Tax (CGT) has brought fresh challenges for UK SME business owners considering a sale or investment. With potential buyers scrutinising every aspect of business operations; cybersecurity and compliance are now critical factors in maximising business value and preventing “value chipping” during the due diligence process.

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Why buyers scrutinise cybersecurity

• The recent Capital Gains Tax increase raises the stakes for UK SME owners considering a sale or investment.
• Cybersecurity and compliance are now critical factors in maximising value and preventing “value chipping” during due diligence.
• Private Equity firms and trade buyers are increasingly wary of poor information security management systems or missing ISO certifications.
• Inadequate cybersecurity can lead to deal delays, reduced valuations, or deal withdrawals, especially in tech and software.

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Hicomply's take

For Hicomply, Protecting Your Business Value: Why Cyber Security is Critical in a Post-Capital Gains... is a reminder that compliance has to work continuously, not just when an audit or customer review appears. Keep ownership clear, collect evidence as work happens, and use automation so the same work can support ISO 27001 and other frameworks; our platform tour shows how that operating model fits together.

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Why cybersecurity matters for business valuation

According to Ed Bartlett; CEO of Hicomply; weak cybersecurity measures can erode business value significantly during M&A (Mergers & Acquisitions). Investors; especially Private Equity (PE) firms and trade buyers; are becoming increasingly wary of acquiring businesses with poor information security management systems (ISMS) or lack of ISO certifications.

In tech and software sectors; where product integrity depends heavily on security resilience; inadequate cybersecurity can lead to deal delays; reduced valuations; or even deal withdrawals.

Cybersecurity risks by sector

SMEs across various sectors face evolving cyber threats. Recent data highlights the sectors most vulnerable to cyberattacks in the UK:

For SMEs overall; the average cost of a cyberattack is around £75;000; enough to jeopardise profitability and operational stability. There aren’t many SMEs that could absorb a financial hit that big.

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How ISO standards impact valuations

Meeting ISO 27001 standards for information security can increase business valuations by 10% to 20%. ISO-certified businesses are more likely to pass due diligence smoothly; while those without certifications risk deal delays or breakdowns.

Other certifications like Cyber Essentials; a UK government-backed scheme; provide basic protections and signal proactive security measures to investors.

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Steps SME owners should take to prepare for sale

To protect and enhance business value; SME owners should:

Perform a cybersecurity audit: Identify and resolve vulnerabilities before buyers discover them.

Pursue ISO 27001 certification: Boost investor confidence with internationally recognised security standards.

Implement Cyber Essentials: A cost-effective step for businesses not ready for ISO 27001.

Train employees: Reduce human error risks through regular cybersecurity training.

Enhance physical security: Limit access to sensitive IT systems.

Consult a security expert: Develop a tailored cybersecurity strategy aligned with investor expectations.

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Adapting to the new tax landscape

Increased Capital Gains Tax has raised the stakes for SME owners. To avoid “value chipping” during due diligence; robust cybersecurity and compliance are no longer optional — they’re essential for preserving and increasing your business’s value.

By prioritising cybersecurity now; you can position your business for a successful and lucrative sale in a challenging market.

Ready to take control? Book a demo today.

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