Covid-19 and the artificial respirators

02, May

Credit assistance, restructuring, strategic alliances, takeovers, mergers, acquisitions, are all valid options in ...

Credit assistance, restructuring, strategic alliances, takeovers, mergers, acquisitions, are all valid options in unprecedented times for the contemporary business world. As always, the key is to analyze each option in depth, and decide with strategy and vision.

By Eugenio Micheletti* for staffingamericalatina

The title is not in good taste, but these articles seek to enrich the discussion on the options for companies to return to the path of growth and profitability, and thus regain value.
According to the available information and to the analysis of several service sectors, the short-term scenario (towards Q2-2021) foresees important losses and definancing in the human capital solutions sector; the medium-term one proposes mergers and acquisitions with predominance of the main players in each market and at a global level (of course, beyond the size, those that have a healthy financial situation); and the long-term one requires the redesign of the business models, with the incorporation of more technology and digitalization of the processes.
All analysts agree to a greater or lesser extent that Covid-19 accelerated the changes and shortened (by force) the implementation times of digital work models and more technological tools. As examples of business models we can mention the “online staffing” and “just-in-time staffing”, whose structure costs are much lower than the traditional ones (for more details see Staffing Industry Analysts, Future of Work, Workforce Solutions Ecosystem, November 2019). Regarding the technology and tools available, the possibilities are innumerable, from the simplest and most economical to implement, such as remote interviews and teleworking or home office, to the implementation of intelligent databases that propose candidates who meet the characteristics required by the search, or interviews through robots that identify characteristics in the personality of the candidates, and matchean them efficiently with open searches.
But I want to focus the analysis to the conjuncture, since the crisis demands an urgent action plan, and in some cases extreme and difficult decisions, oriented to the survival of the companies.
These days many of our clients are meeting with their peers to analyze opportunities for collaboration and joint commercial efforts, to recover turnover levels, improve profitability, and optimize administrative processes to make structures more efficient.
With the intention of simplifying the study, and in the understanding that each case is particular, we could divide the options in three levels of depth, according to the degree of integration sought by the companies, and in turn raise the scope and impact on their future.
Strategic alliances, or collaborative agreements in the commercial, operational and/or financial administrative field: its main objectives are to recover invoicing and collection levels, as well as to optimize administrative structures, in some cases by sharing best practices in critical processes. Although it may seem an easy and fast implementation alternative, this requires sharing key commercial, operational and financial information, such as pricing policy, key customer contacts, niche strategies, administrative procedures, competitive advantages and weaknesses, data on the economic and financial situation, and most importantly, access to human resources and talent structures. On the other hand, it is healthy to establish what continuity the alliance will have over time, and the motivations, interests and expectations of each party.
Takeovers or Mergers: It is obvious that these options imply a much deeper level of commitment among the participating companies. In fact, all of them stop working as they have been doing. Therefore this demands more complex negotiations, such as portfolio or company valuation, determination of the participation of each shareholder in the new company (or of the absorbed shareholders in the absorbing company), working capital requirements and sources of financing, market communication plan and commercial strategy, design of the new structures, etc.
Acquisitions: these alternatives require, first of all, an in-depth analysis of the characteristics of both companies to determine the possibility of commercial, operational and financial synergy. Not all companies that are willing to sell are good alternatives to buy, nor can all buying companies get the best out of the companies available in the market. A good negotiation is also essential to determine a fair value, but if it is