Turnaround and Corporate Renewal in the next economic phase
While there is talk amongst economists of a ‘V’, ‘W’ or ‘bathtub’ shaped recovery, they all agree on one thing - we are all experiencing a new normal. Significant areas of the economy will see permanent change with second and third round effects, both positive and negative. Consumers and business clients will change their purchasing habits.
As the immediate health crisis passes and we move to the recovery stage later in 2020, many clients are telling us they expect their existing business structures will need modification. The significant effect of the COVID-19 crisis may also require companies to take extraordinary measures to ensure they can continue to trade.
Almost all business need to review their current structure and determine what may need to change.
COVID-19 government measures are temporary
Many companies are only surviving because of the temporary COVID-19 government measures and legislation.
When the temporary measures are lifted and the wave hits, we are predicting significant restructuring by businesses.
This will be impacted by:
- Industry sectors. Some sectors have been hit harder than others so far. This is expected to evolve and there will be winners and losers.
- How the business was functioning pre-COVID. The emergency measures have allowed some businesses to continue that were not otherwise viable. As these measures end, these businesses will be at significant risk of formal insolvency.
- Supply chain issues. Businesses are already experiencing significant disruption to supply chains caused by mandatory shutdowns and border closures (international and domestic). If suppliers or customers are not viable and are unable to restructure or do not transform quickly enough, alternative markets and suppliers will be needed. This can be anticipated now.
- The balance sheet pain caused by COVID. Many businesses will be carrying significantly higher liabilities. Unless these are dealt with, shareholders may be unwilling to continue to support the businesses. Banking covenants may be breached and lenders may require their loans to be restructured and geared differently.
- The long term consequences of COVID. There will be permanent change to many sectors of the economy and businesses will need to respond and adapt if they are to survive. How are your clients and customers affected? What are your new growth areas? What should you exit?
Our Turnaround & Corporate Renewal team is able to look at the risks and issues businesses are facing and identify the best solutions going forward. Our team works collaboratively across all our offices and practice areas including Employment, Property, Banking & Finance, Corporate & Commercial, Tax, Dispute Resolution and Insolvency.
This collaborative approach is part of our culture and extends to working with you, your clients and your existing advisors. Through our referrer networks (both local and international) we can introduce non-legal skills (such as financial and corporate advisory) to help you solve the most complex business problems.
David is a commercial litigator with extensive insolvency and reconstruction experience, and expertise in property disputes.
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Partner & Head of US Practice
In the corporate space, Jacqui regularly advises and assists client with mergers and acquisitions, corporate structuring, corporate compliance and governance, capital raisings and managed investment schemes.
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Mark has almost 20 years' experience acting for Australian and overseas financial institutions and borrowers in a broad range of finance transactions...
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Partner & Head of SE Asia Practice
Ed’s practice covers private mergers & acquisitions (both local and international), with particular specialism in mid-market deals in Australia, distressed M&A and inbound international transactions. Ed has significant experience running large projects including company establishment, corporate restructures and succession for large family groups.
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Mark specialises in corporate insolvency matters, commercial litigation and corporations law disputes, intellectual property and copyright litigation, and financial services disputes including securities enforcement. He also has extensive experience working with banks and wealth funds, and advising on matters related to Royal Commissions and inquires.