Transactions & Finance

Corporate Finance Wakes up to the Threat of Cyber Attack

© Veritech Systems

In February 2016 the Central Bank of Bangladesh was severely hit by a major cyber-attack. The hack cost the bank $80m. The cyber-criminals managed to hijack the SWIFT framework to pursue their wrongdoing.


The corporate finance world is more and more concerned by cybersecurity and what occurred in Bangladesh was only the tip of the iceberg as major financial players, such as Lloyd’s Bank and Scottrade also suffered cyber-attacks. Corporate law firms are equally concerned by this modern form of havoc. Indeed, on June 27th 2017, DLA Piper experienced this bitter reality for themselves when their systems were massively hacked, endangering the confidential data the firm handles on a regular basis. These organizations are tempting targets for the hackers as they possess large amounts of sensitive data, on M&A for example. Therefore, while doing deals and as part of due diligence, one might wonder: When did the board of directors last heed cyber-security advice? Who is in charge of this in the company? Has the company been audited for this matter? How is the most valuable information in the company shared and protected? Are there any emergency procedures in place for when hacks occur?


These and many related questions which could have been brushed aside a few years ago are now of central importance. Fortunately, agencies including the SEC in the US are providing guidance.


Cybersecurity financing deals are also booming. According to CB Insights, cybersecurity deals in Q1’17 hit an all-time quarterly high, up 20% from the previous quarterly high. As of summer 2017, more than 190 cybersecurity deals had been concluded. CrowdStrike obtained a $100m Series D round from investors, and the second largest deal in the first half of 2017 went to Armor Defense, with an investment of $89m from Singapore Technologies Telemedia and The Stephens Group.


Okta, a unicorn enterprise specializing in data storage is the paragon of success in this fast-growing field. During Q1’17 it released the price range it intends to sell shares at, and if it succeeds the company will manage to raise $160m and be valued at almost $2bn. More and more companies can be identified as specializing in cybersecurity and eight of them are valued at $1bn+. As this threat grows, related investments are on the rise. This is just the beginning.


Follow the publication of our 2017 International Corporate Finance - Transactions & Deals Report for more exclusive interviews & articles.


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