If Cyber Can Move a Stock Price, It Can Move a Deal Price
Companies That Stay Operational Keep Their Value
There is a strange contradiction in the deal world. Cyber events must be disclosed to the SEC because they are financially material. A single breach can move a public company’s stock price. Yet in private deals, cyber is still treated like an IT task that someone can clean up during diligence week.
Public markets already treat cyber incidents as financial events. Private markets still treat it as optional homework.
That gap is where sellers lose money.
What Buyers Adjust Before the First Meeting
Over the years, I have watched buyers walk into negotiations with their numbers already trimmed. They do not announce it. They do not debate it. They price in uncertainty.
A PE professional once told me that when a seller cannot prove their cyber posture, the valuation drops by 5 to 15 percent before the meeting even begins. Different industries fall in other parts of that range. The research supports it. Eight percent keeps showing up.
No one calls it a cyber haircut. They call it prudence.
But if a cyber incident can move a stock price, it can absolutely move a deal price.
The SEC Saw It First
When the SEC required public companies to disclose material cyber events on Form 8 K, it confirmed what the market already knew. Cyber is not a technical nuisance. It is a financial event.
And the market has seen enough proof.
FedEx reported about 300 million dollars in losses from the NotPetya attack and cut its profit forecast. The stock moved immediately.
Maersk reported losses of 200 to 300 million dollars and rebuilt thousands of systems by hand. Global shipping and port operations were disrupted.
Merck absorbed more than 1 billion dollars in damages and later secured a 1.4 billion dollar judgment after years of litigation with insurers.
Equifax lost billions in market value within days of its breach. The stock fell nearly 30 percent. Executives resigned. Regulators stepped in.
MGM Resorts disclosed about $ 100 million in quarterly impact following its ransomware event. Its stock dropped about 4 percent.
These were not IT issues. They were business issues with real financial consequences.
Private Companies Feel It Too
One of our clients watched this play out in real time. A company they connected to filed an 8-K regarding a cyber incident. The moment that filing went public, our client shut down every integration and data connection to protect their own operations. They did not resume the relationship until the affected partner proved the environment was secure.
Operations paused. Data flows paused. Trust paused.
That is what material means. It forces action. It changes behavior. It affects value.
The same logic applies to private deals where the stakes are high and the margins are thin.
The Cost of Downtime Shows Up in Valuation
A cyber event today does not cause a rough week. It causes a rough quarter.
A significant incident now creates 22 to 24 days of disruption and more than $ 5 million in impact. Deals slow. Timelines stretch. Buyers worry.
Downtime is a preview of future operational risk. Future risk becomes a financial adjustment. That adjustment becomes a change in valuation.
This is why buyers model cyber risk even when sellers do not.
The MSP Problem No One Talks About
Many breaches do not start inside the business being sold. They start with the company’s MSP.
Nearly 70 percent of MSPs were breached last year. About 33 percent of all cyber incidents begin with a third party. The average MSP serves about 122 clients. So when an MSP is breached, the blast radius is not one company. It is every business they touch.
The part most people miss is the pivot. Research shows that once attackers gain access to an MSP, they reach a client system 76 percent of the time. Three out of four. This is why more than 2 million businesses were hit downstream.
A seller can be doing everything right and still lose value because someone upstream left a door open.
Traditional diligence does not look for this. Buyers now do. Sellers should too.
The Insurance Mirage
When cyber comes up in a deal, someone always suggests insurance. It sounds simple. It never is.
It is now more expensive to buy the insurance than to fix the weaknesses that created the risk in the first place. Insurers are raising premiums. Tightening requirements. Pursuing recovery after they pay claims. Taking legal action against vendors who failed to meet basic controls.
Insurance cannot replace resilience. It cannot replace proof. And it cannot protect value when a buyer sees gaps.
You cannot buy coverage for a risk you refuse to solve.
Proof > The Checkbox
This is the moment cyber risk completes its shift from IT to finance. From operations to enterprise value. From assumptions to evidence.
Cybersecurity is not about what you think or feel. It is about what you can prove.
Buyers want proof because proof removes uncertainty. Sellers protect value when they provide that clarity before anyone needs to ask.
Without proof, value becomes negotiable. With proof, value becomes defensible.
The checkbox never saved a deal. Proof often has.
How Sellers Protect Their Number
When the buyer finds the issues first, the value drops, the deal slows, and confidence slips.
When the seller finds them early and fixes them, the value holds, the deal moves, and the buyer relaxes.
The difference between these two paths is measured in millions.
Cyber due diligence is not fear-driven. It is precision-driven. It removes surprises that should never have existed.
If cyber can move a stock price, it can move a deal price. Sellers who prepare keep their value. Sellers who do not leave that decision to the buyer.
Conclusion
Cyber already shapes public markets. It already moves stock prices. It already drives partners to pause business. It already influences valuations behind closed doors.
The only group still operating under the old assumptions is the one doing private deals.
Independent cyber due diligence closes the gap. It gives sellers the clarity buyers expect. It protects value before someone else prices the risk for them.
Cyber will shape the deal whether you prepare or not. The only question is who controls the narrative.
To learn more or to schedule a strategy session, visit www.ncxgroup.com.
PS
The most important ability is availability. Companies that stay operational keep their value. Cyber readiness has become one of the strongest indicators of both.
Mike Fitzpatrick, Founder and CEO of NCX Group, Helping leaders protect operations and preserve value www.ncxgroup.com LinkedIn: linkedin.com/in/ncxgroup
Repost from LinkedIn – https://www.linkedin.com/pulse/cyber-can-move-stock-price-deal-mike-fitzpatrick-5ugic/
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