Private companies and COVID-19
Accessing the debt markets during and after the crisis
For private companies, accessing capital can be a challenge during ordinary times. The COVID-19 pandemic, which has quickly morphed into a global humanitarian crisis and economic disaster, has dramatically upped the stakes and added a new layer of complexity. And while the quantitative easing programs initiated by governments around the world have propelled the markets to function, these efforts are likely to be of limited efficacy and will not cure what ails many beleaguered companies, particularly private enterprises.
As such, private company finance leaders should be preparing for what is likely to be a tougher credit environment and no matter where their company is on the credit spectrum, re-evaluating their capital needs to identify potential liquidity mismatches and seek to bridge the gaps.
In this paper, Deloitte Private outlines four areas of opportunity companies can consider to meet their needs, including:
The COVID-19 crisis has created a level of uncertainty few private companies have ever had to face—and, by all counts, it’s unlikely to fully clear for the next several years. Now is the time to get ahead of a more troubled debt-raising environment, as the market for available capital will likely become more crowded as downgrades and defaults increase. All credit relationships need to be considered, whether they are traditional players such as banks, or alternative lenders such as private debt or private equity providers. Those enterprises with thorough contingency plans will be in a far better position to weather the storm, while those with stronger balance sheets will be primed to take advantage of dislocations within their industries and shift into higher growth mode as the recovery accelerates and the “next normal” evolves.
