A BESSE study presents an analysis of the impact of a cyber attack on the valuation of unlisted companies.
Several studies have already analyzed the impact of a cyber attack on the valuation of listed companies. In particular, we can cite the PwC France study, conducted with G.P. Goldstein, on 30 incidents, which demonstrated a significant impact on the value of a listed company. In 63% of the incidents, the stock price dropped by an average of about 9% during the first month of trading following the attack
One might intuitively imagine that listed companies are more exposed to the risk of external shocks than unlisted companies. Indeed, the valuation of listed companies is relatively sensitive to reputation issues.
Valuation of unlisted companies and cyber attacks
Nevertheless, unlisted companies that are victims of a cyberattack may have more difficulty in obtaining short-term credit facilities, and perhaps even more difficulty in obtaining the long-term debt needed to get through the crisis with an increased risk of default.
Thus, in the framework of the study "Cyberattack and business valuation" conducted by the firm BESSE, it is estimated that at the peak of the crisis in month "3", the risk of failure increased by 51% compared to before the crisis.
There are several links that may indicate that an increase in default risk may also lead to a reduction in the valuation of the firm. More recent modelling has also attempted to assess the impact of a 1% increase in the probability of default on all the components of the balance sheet, i.e. long-term debt and capital, and in particular arrives at results of a reduction in enterprise value varying between -8% and -36% at most.
Applied to the sample analyzed in the BESSE study, we obtain a reduction of the company value of -12.2% for a company victim of a cyber attack.
Access to the study : link to the study
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