Increasing cyber threats from artificial intelligence

The UK Cybersecurity M&A market has grown significantly over the past decade, with the deal volume trend line increasing, and the sector continuing to attract significant investment from Private Equity, alongside larger corporates consolidating emerging technologies to counter increasingly sophisticated threats.

The UK National Cyber Security Centre has reported a significant rise in state-aligned or sponsored cyber adversaries in the past 24 months. Examples include the UK Government’s accusation in March 2024 that China was behind "malicious" cyber campaigns against MPs and the Electoral Commission. In response, recent UK cyber milestones include fortification against foreign interference via the National Security Act and advancements in online safety measures with the Online Safety Act.

Cybersecurity assets continue to be highly attractive as domestic and international threats continue to rise

According to Heligan Group, the threat of aggressive cyber activity from criminals and state-aligned groups isn’t going away, fuelled by the adoption of technologies such as AI. Cybercrime remains a significant concern for the UK, with a government report estimating that in 2023-24, UK businesses experienced approximately 7.78 million cybercrimes of some form.

Simon Heath, Managing Partner at Heligan Group said, “The UK needs to accelerate its investment to keep pace with the evolving cyber threat, particularly in enhancing cyber resilience in the nation’s most critical sectors. Over the next two years, artificial intelligence is expected to increase the global ransomware threat due to the availability and capability of the emerging tech to short cut programming and coding of these threats.”

Both private and public organisations are facing significant challenges in managing their vulnerabilities, whether that be protecting critical national infrastructure or the resilience of IT security for corporates. Risk mitigation and improved resilience requirements creates opportunities for SMEs and large defence primes to develop innovative solutions.

Increasing cyber threats from artificial intelligence

Heath continued, “The UK continues to see evidence of China state-affiliated cyber actors deploying sophisticated capability to pursue strategic objectives which threaten the security and stability of UK interests. Russia also poses a significant threat to the UK with ongoing cyber operations globally, including opportunistic targeting of Ukraine, while Russian language criminal networks, particularly involved in ransomware and 'ransomware as a service' models, are increasingly impacting the UK cybersecurity landscape.

The Cybersecurity M&A market is expected to remain buoyant amid increasing cyber activity from state-aligned groups and threats from artificial intelligence, malware, and phishing attacks

“Moreover, the Democratic People’s Republic of Korea’s (“DPRK”) offensive program is continuously evolving, showing that the regime is determined to continue using cyber intrusions to conduct both espionage and financial crime to project power and to finance both its cyber and kinetic capabilities. DPRK continues to pose a significant threat within the cyber domain. Iran has been exhibiting growing expertise and aggressiveness in cyber operations, targeting critical infrastructure and utilising destructive malware and ransomware, posing a significant cyber threat to the UK government and business networks.

“The need for organisations to continue developing and strengthening protections for their digital networks, together with mitigating the increasing cost of cyber-attacks, will continue to drive demand for cybersecurity services. Therefore, it is expected that the M&A market will remain buoyant when appreciating the strategic considerations companies face to demonstrate their robustness to these digital threats”, concluded Heath.

Simon Heath, Partner Heligan Corporate Finance, said: “Bringing five analysts into the Corporate Finance team has been a significant milestone and demonstrates our commitment to the region. While it is unusual for a Corporate Finance practice our size to take on so many graduates at one time, we have a clear strategy for future growth and the new additions are a critical part of supporting that plan.”

Simon continued: “I received post graduate training and was inspired by some amazing people at the beginning of my career. So, I really wanted to give back and inspire the next generation of deal makers, especially in a city that has been at the heart of our journey.

“We are a fast-growing firm, with a highly experienced team. What better way to nurture future talent and benefit from new ways of thinking. This is what helps Heligan Group see things differently for our clients”, concluded Simon.