The rise of the Zombie company
No doubt we’ve all sadly viewed our ever-changing high streets resplendent with “closing down” signs and empty shops, pubs and restaurants with a mixture of doom and foreboding. Retail and hospitality are sectors that have been hit hard by the Covid pandemic but they aren’t the only sectors that have a zombie problem.
Many sectors in the UK economy have had a zombie problem for some time now, trundling along without generating a profit and the pandemic has just made matters worse for them. The Government business support measures (such as the furlough scheme and government backed loan schemes) may have eased the pressures these companies were under in terms of cash flow management and liquidity but there is a sense this just delays critical decision making about a business’ future.
Why should we be so concerned? Naturally, if zombie companies exist, the economy is not working efficiently and that impacts employment, productivity, growth and business investment. Given the uncertainty of how the pandemic will pan out in short to medium term it is understandable why management of such companies find themselves treading water rather than planning ahead.
Going through a range of outcomes and scenarios can help ease this unwillingness to act and help management make decisions – be that downsizing, divesting or just shutting up shop.
If you would like to discuss this further with us then please feel free to contact us.
Our contact details are:
07780 336956 Raemy Singh FCA
07780 336952 Delphine Paterson FCCA ACIB
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