Industry Solutions

CMMC Compliance for Private Equity

Private Equity

Private Equity (PE) is becoming a major force in the Defense Industrial Base (DIB) acquiring manufacturers, Architecture, Engineering, & Construction (AEC) firms, and solution providers with ties to Department of War (DoW) contracts. However, with those deals come complex CMMC obligations that can directly impact contract eligibility and company valuation.

Top CMMC Pain Points in Private Equity

Decentralized Ops

Dozens of operating companies (Opcos) with some handling Controlled Unclassified Information (CUI), International Traffic in Arms Regulations (ITAR), or Export Administration (EAR)-regulated data.

Unknown Risk

Many acquisitions lack clear visibility into their defense obligations or how far CUI spreads.

Shared IT

Holding companies often centralize IT or HR, but shared infrastructure is often non-compliant.

Exit-Ready Compliance

You need CMMC without inflating costs or losing certs during future sale events.

All-In Approach

For defense-heavy Opcos that require full migration.

Full Government Community Cloud (GCC) High environment per company
Includes licensing, implementation, and managed support
No dual systems; fully compliant from user one

Ideal for: Opcos where >15% of users handle CUI

Shared Enclave or Per-Opco Enclave

A flexible, scalable approach based on your exit or holding strategy.

Host multiple Opcos in one shared Gov Cloud enclave
Or deploy individual enclaves per Opco for sell-off readiness
Supports engineering tools and secure data segmentation
Keeps CMMC certification with the asset when sold

Ideal for: Firms balancing hold/sell strategies or spinning up 8(a) entities

Frequently Asked Questions

Are PE-backed companies at higher risk for CMMC violations?

Yes, especially when portfolio companies share resources or operate under centralized control without proper compliance boundaries. The Department of Justice (DOJ) recently penalized a PE firm $1.75 million for allowing unauthorized access to CUI through shared oversight and IT access. If a PE firm, or its employees, have any visibility into CUI systems, they’re considered External Service Providers (ESPs) and must meet National Institute of Standards and Technology (NIST) SP 800-171 requirements. Risk increases when firms impose central IT, finance, or legal services across the portfolio without strong governance.

How can we ensure acquired companies meet CMMC requirements?

Start with a CUI scoping and gap assessment as part of your Merger & Acquisition (M&A) due diligence process. Review their current environment against NIST SP 800-171, confirm if they handle CUI, and evaluate their Supplier Performance Risk System (SPRS) score documentation. Summit 7 helps PE clients evaluate acquisition targets, prioritize remediation, and define go-forward enclave strategies. Waiting until after the deal closes often results in costly surprises and compliance delays.

What compliance clauses must be included in M&A agreements?

Legal language should require:

– Disclosure of existing CMMC or Defense Federal Acquisition Regulation Supplement (DFARS) 7012 obligations
– Current SPRS scores and supporting documentation
– Affirmation of CUI scoping
– Remediation timelines and accountability post-close

You should also include indemnification language tied to non-compliance risks. Summit 7 works with legal and compliance teams to ensure deal documents include enforceable cybersecurity protections.

Can we build a shared enclave for multiple portfolio companies?

Yes, but only if each entity has clearly defined boundaries within the enclave. This includes role-based access controls, per-entity audit logging, and CUI segmentation. Multi-tenant environments are technically possible in Government Community Cloud (GCC) High or Azure Gov, but require careful planning and justification during assessments. For most PE firms, a better approach is to build standardized enclave templates and deploy them individually per portfolio company.

What are the implications of giving offshore teams access to CUI?

Access by non-U.S. persons to CUI, especially ITAR/EAR-regulated data, is a serious compliance breach. Even viewing technical files without modifying them constitutes an export violation. This risk extends to offshore developers, contractors, or outsourced IT providers. PE firms must ensure their portfolio companies enforce U.S. person-only access for sensitive environments and do not contract with global vendors for CUI systems unless proper export licenses are in place.

How do SPRS scores affect valuation during acquisition?

SPRS scores provide a snapshot of a company’s cybersecurity posture. A 110/110 score submitted without valid documentation can trigger False Claims Act investigations. If the score is inaccurate, your acquisition could carry significant financial and legal risk. Verifying the SPRS score, and ensuring supporting evidence is in place, is essential. A falsified score can lead to DOJ enforcement, fines, and contract loss, affecting both valuation and deal viability.

Should we invest in GCC High or Virtual Desktop Infrastructure (VDI) for rapid deployment?

GCC High is generally more cost-effective for most small to mid-sized portfolio companies. While VDI offers strong isolation, it requires expensive infrastructure – Azure Sentinel, Log Analytics, Azure Firewall, etc. – which can double the cost compared to a well-scoped GCC High deployment. For rapid compliance and scalability across the portfolio, Summit 7 typically recommends a “big bang” migration to GCC High as the more straightforward path.

Can compliance be centralized across a portfolio?

Some functions, like policy templates, governance frameworks, or centralized CUI training, can be centralized. However, technical environments and system boundaries must be unique to each entity unless you’re operating a validated shared enclave. Summit 7 provides repeatable compliance blueprints that PE firms can deploy across their holdings, allowing for standardization while preserving assessment integrity.

What happened in the DOJ case involving a PE firm and CUI exposure?

The Department of Justice settled with a 70-person defense contractor and its PE firm after Egyptian nationals were given unauthorized access to CUI. Despite the company self-reporting and cooperating, the total penalty reached $1.75 million. This case set a precedent that PE firms can be held accountable, not just their portfolio companies, when they influence or allow improper CUI access. It emphasizes the need for proper controls at both the portfolio and investor level.

How can we mitigate compliance risks before exit or recapitalization?

CMMC readiness can materially impact valuation and deal terms. To mitigate risk:

– Verify all SPRS scores with evidence
– Conduct enclave scoping and gap assessments across your portfolio
– Document flow-down compliance and subcontractor controls
– Build a compliance roadmap aligned to CMMC Level 2
– Ensure any shared service models don’t cross compliance boundaries

Summit 7 helps PE clients strengthen cybersecurity maturity pre-exit, reducing exposure and increasing investor confidence.

Case Study

J&J Worldwide Services: Enhancing CMMC compliance with Microsoft Purview and the M365 G5 License Stack

“We wanted to be a company that was known for partnering with the best. We knew Summit 7’s Microsoft G5 License with its compliance suite would increase our value to a potential buyer – they would know we are aligned with a partner that is truly the best in class.”

– Jeff Smedley, J&J Worldwide Vice President and Chief Information Officer

Read the Story

Testimonials

When I tell big-name defense contractors we’re working with Summit 7, there’s a sigh of relief. That’s a huge advantage.

Matt GustafsonPresident, Clinkenbeard

I have been working with these guys for years now! With lots of hard work and timely communication they made sure they delivered the best to me. Highly recommended!

John DoeCompany Name

“This year, we’re going to pass $400 million. We’re making headway in regulated research. Microsoft and Summit 7 have been a significant contributor toward that growth.”

Reese DangerChief Research Security Officer

Summit 7 provides all the security capabilities we need on our behalf. We can sleep well at night knowing Summit 7’s MXDR service, Vigilance – built on the backbone of Microsoft Defender and Sentinel – has 24/7 monitoring and is a cost-effective model for us.

Reese DangerChief Research Security Officer

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