December 09, 2020
03:00
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According to Thomas Deryckere, director at PwC Belgium, “now is the time for companies to restructure and reassess their strategy”.
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For businesses, this pandemic is the world upside down. “Usually, it’s a problem of strategy that leads to a problem of profitability, which ends up having repercussions on liquidity,” says Thomas Deryckere, director at PwC Belgium. “This time, it’s the other way around: the question of liquidity is immediately obvious to businesses that have had to close or reduce their activities. ”
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Of course, the authorities have stepped up measures to preserve the liquidity of the companies affected. “But what will happen when government aid disappears?”, Embarrasses the consultant. “Liquidity problems will suddenly arise, in any case for companies that have not taken the lead. However, when we are in liquidity problems, the options for correcting things are very limited. ”
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“Once the economy revives, we will have to run with less revenue.”
Thomas Deryckere
PwC Belgium
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In addition, “in many sectors, we will not suddenly find the volumes before the pandemic. It will sometimes take four or five years to regain the level of 2019. Once the economy has revived, it will be necessary to operate with less income. ”
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Act in four steps
So many reasons to act proactively, now. What to do? Thomas Deryckere suggests a trajectory in four stages.
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One, reduce the fixed cost structure and optimize its operations. Two, have one precise view of current and future liquidity, once the deferral of payments and other temporary support measures have disappeared.
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Three, lead them financial restructuring that are needed. “Once the company has a good idea of the effect of cost restructuring and on its current and future liquidity, it’s time to speak with its creditors, starting with its banker, to consider refinancing. for example an adjustment of the repayment plan of its debts. Currently, banks are quite open to this approach and this is understandable: they will typically prefer debt rescheduling to bankruptcy. ”
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In passing, the consultant recalls thatit is not just the banks to strengthen its balance sheet: A detour through private or public funds, venture capital and family offices can be worth it. “Liquidity is reaching unprecedented levels there and, in addition to cash, there is also expertise to be sought in these structures …”
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“It’s the law of the genre, there will be some great opportunities to be taken at a great price too.”
Thomas Deryckere
PwC Belgium
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Finally four, and that’s anything but a detail, it’s about redefine a new strategy which is adapted to the post-Covid period. “Perhaps we should consider selling certain activities, or on the contrary carry out an acquisition. Because, it is the law of the genre, there will be interesting opportunities to take, at an attractive price too. “
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In other words, if restructuring is expected to increase by mid-2021, according to PwC, this movement should be accompanied by a resumption of mergers and acquisitions.
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In any case, insists Thomas Deryckere, “it is now that companies must restructure and reassess their strategy. If they wait until the end of public aid to act, it will be too late. ”
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