The situation in companies is not optimistic
Entrepreneurs do not assess their situation at present and are not optimistic about the future. One fourth of them already have problems with financial liquidity. This is a good time to consider restructuring.
Entrepreneurs mostly evaluate their situation as average or bad.
This was stated by 52% companies surveyed by KPMG in December 2020. In turn, 38% they think it is good, and 10% think it is very good. This is not a bad result, given that we are dealing with an economic crisis.
It is not known, however, whether the companies’ opinions are only their feelings or whether they are also reflected in the financial data. However, it should be remembered that the study was conducted during the second wave of the pandemic. By that time, many companies had managed to take advantage of state aid under anti-crisis shields and adapted to the new conditions.
Despite this, their uncertainty about the future remains high. Only 40% entrepreneurs predict that the next months will be good or very good for them. It is understandable, especially in the context of the restrictions still in force and problems with the efficient implementation of vaccination campaigns. As much as 55% companies believe that their business in the coming months will develop moderately, badly or very badly. They evaluate the development of the industry in which their company operates in a similar way. Half of the respondents are not optimistic in this respect.
At the same time, most of the entities in difficulty today believe that their biggest problem is falling sales. This is what 83% say subjects. Undoubtedly, this is the effect of uncertainty, lockdown and tightening of belts not only by consumers but also contractors.
It is also disturbing that as much as 27% entrepreneurs indicate the loss of financial liquidity as the biggest problem. This is a good time for them to consider judicial restructuring, and when it is very bad, even bankruptcy.
Restructuring on your own
25% think about business restructuring. companies. However, it is not about procedures provided for in the restructuring law, but about a merger with another company, liquidation of operations, bankruptcy or transfer of business functions within a capital group.
It is interesting, however, that entrepreneurs most often mention the need to improve financial liquidity as the reason for restructuring. Undoubtedly, there is room for judicial restructuring here, which may turn out to be a better solution than the sale or transformation of the company. Moreover, 37% of companies declared that the planned restructuring is the result of a previously adopted business strategy. This means that the crisis is unlikely to favor restructuring decisions, at least one that consists in merging or transforming the company. This is understandable as such activities are very costly.
Moreover, only 37% companies planning restructuring intend to use the help of professionals, i.e. as much as 63% companies are confident that they will handle this process on their own. It is usually entrusted to the management board. It is interesting, the more that restructuring is a complicated matter. The more that business problems usually have deep roots. If the company’s poor situation is only an effect of a pandemic, it can be assumed that the business itself is healthy. Certainly, however, in the case of many companies, the pandemic only emphasized or accelerated the problems that would have occurred anyway. In many cases, the coronavirus can only be used as an excuse. If the company has had losses in the past two years, it’s hard to believe that the pandemic has now stopped their liquidation.
The thread of the KPMG study on state aid is also interesting. It seems there was a lot of interest in her. As much as 78% companies that assessed their situation as average or bad benefited from such support. Unfortunately, only 19% rated them well, and 34% companies were dissatisfied. This shows there is a big system problem. The help was prepared blindly and it turned out to be missed, late and insufficient. Moreover, there was a problem with its settlement. On the other hand, many new, small taxes have entered into force that will further burden companies.