The corona crisis is having a significant impact on companies. Attention to the safety and protection of people is a priority, but can these special times also bring inspiration for the future?
One important conclusion from the EY Global Capital Confidence Barometer is that companies are only too well aware of the far-reaching consequences of the corona crisis. But this is also a time for companies to ask the right questions about their own organization. Riding out the crisis will certainly take time but there may also be opportunities along the way.
The EY Global Capital Confidence Barometer (pdf) is a recurring survey by EY. Every quarter, companies are asked about their feelings on the economy in general and the M&A market in particular. The most recent edition covers the first quarter of this year, when the corona crisis suddenly surfaced. An update of the questions was sent out which led to a result that takes into account the initial views on the impact of the crisis.
The overall conclusions
A first, and certainly not surprising, observation from the survey is that an overwhelming majority of the surveyed companies expect a serious impact of the corona crisis on both the economy and their own company. Moreover, about half expect a slow recovery lasting for the rest of 2020, and well into 2021. These respondents are usually large companies, often multinationals. Every week, EY also conducts a survey among about 80 Belgian medium-sized companies. This produces results that are also in line with what the GCCB shows. From 20 to 27 March, 80% of the companies claim to have been severely affected by the crisis. 70% expect a drop in turnover and 20% a regression of more than one quarter. The latest review on 7 April shows a somewhat more positive mood among these companies, given the recent prospect of possibly having the national pandemic under control.
A new paradigm
It is no exaggeration to describe this situation as a new paradigm. Companies are faced with a challenge but may have more opportunities than they realize. Recovery will depend on two very relevant factors: how long it will take to bring the health situation under control and how large and how effective will the impact of government intervention be? The latter especially concerns real differences between countries. This complicates the estimation.