We know. You are tired of hearing about COVID-19. We are too. We also know, fatigued or not, we must stay abreast of how this pandemic continues to affect our bottom line. And although our respective landscapes have changed, and continue to change, what is crystal clear is our need to push on. We must continue to seek new pathways forward, or better yet, create new opportunities for success. With this in mind, we wanted to offer a few insights and a little perspective. We hope you’ll take a moment to read and share.
M&A Deals and their Value During Global Financial Crises
Repurposing our products and services, restructuring, and reprioritizing our initiatives have become fairly commonplace in our global economy. And, in times of crisis, the need to reorganize only increases. It is in these times that companies of all shapes and sizes, and from every industry, begin to evaluate the efficacy and popularity of their services. We consider adding new or advanced technology and contemplate how to consolidate our resources and reassess our overall business model. Mergers & Acquisitions (M&As), however, often take a backseat during times of crisis as companies quickly adopt a “wait and see” approach. During the 2008 global financial crisis (GFC) for instance, “the number of M&A deals dipped by almost 31% year-over-year…and the value of those deals fell by about 27% in the same period.”1
While COVID-19 is a global health crisis and not a true GFC, Harvard Business Review expects similar patterns to occur. In fact, the McLean Group supports this forecast in their latest report with a look at the aerospace, defense, and government sector (ADG). “Pre-COVID lockdown, M&A activity in the ADG sectors was at an all time high – driven by high valuations and a positive economic outlook. With the start of the lockdowns in mid-March, M&A activity in the sector decreased considerably.” June, however, “has been the most active month for GovCon M&A since the pandemic started – potentially signaling that activity is recovering toward historic levels.”
It seems then, that history and the current recovery period both point to a “relatively short M&A window that opens as the current crisis ends, during which bargains will be had by those with the liquidity and the risk tolerance to move quickly, and who have done their homework in advance.”1 What it will really come down to is how successful companies have been with their reorganization planning and implementation.
Common Pitfalls Companies Face During Reorganization
Although many companies recognize their occasional need to reorganize and envision the many benefits that will result from such efforts, without a strategic, logical step-by-step plan in place, these benefits often end up becoming more of a disappointment. As the saying goes, failure to prepare is preparation for failure. For example, some leaders fail to clearly define their objectives and as a result, might inadvertently miss critical steps along the way. Misprioritization is another common pitfall, as is forgetting to include key team players in reorganization plans. Perhaps, however, the greatest pitfall of all is entering into reorganizations with the mentality that they are “survival plans” instead of plans to generate opportunity. Even in times of crisis opportunities do exist – you just have to know what to look for, how to plan, and where to invest.
Reorganization Challenges in Healthcare
Healthcare reorganization efforts, when done correctly, can lead to better medical care, stronger patient self-management, and a more sustainable, integrated approach to healthcare for all. And while it is advisable for healthcare practitioners and hospital leaders to focus on the most obvious areas in their reorganization plans such as investments in technology, patient satisfaction, patient safety, and patient privacy, many still forget to include language services – a potential costly oversight.
In fact, according to the Center for Immigration Studies, in nine US states, “one in four residents now speaks a language other than English at home [and of] those who speak a foreign language at home, 25.6 million (38 percent)… speak English less than very well.”2 With this in mind, as healthcare institutions plan for reorganization, bringing language services into the fold will not only benefit your respective practices, but will also strengthen the communities you serve.
Even before the coronavirus pandemic, virtual medical appointments were on the rise. In fact, the current situation has only expedited this transition, requiring swift investment in advanced technology, along with the increased need to establish partnerships with language service providers (LSPs) that offer virtual multilingual and multicultural support.
Reorganization Challenges in the Energy Sector
With the current downturn in oil and gas prices, the energy sector too is under stress and, as a result, is depriving state governments of crucial tax revenue when they need it the most. This means the oil and gas sector cannot depend on tax subsidies or abatements to withstand the crisis. Even as some states begin to relax shelter-in-place mandates, social distancing guidelines will likely remain in place for some time keeping overall consumption levels low. On an international level, the energy sector continues to navigate a number of potential negative impacts. From a sudden and continued global recession to a decrease in consumer confidence reducing consumption, energy companies share a great many challenges ahead.
According to the International Energy Agency (IEA), “revenues for governments and industry are set to plummet by over $1 trillion in 2020 due to the fall in energy demand and lower prices.”3 In response, many oil and gas companies are feverishly launching their own reorganization processes including stabilizing cash flows, consolidating product lines, reevaluating capital investments, strategically changing management positions, initiating layoffs, cutting salaries, and even closing down facilities in geographic areas that have been hit the hardest. In fact, according to PricewaterhouseCoopers (PwC) US, multinational corporations (MNCs) “should expect potential cash flow constraints from foreign operations – including cash repatriation complications and irregularities.”4
In the same vein however, some MNCs have their sights set on possible new opportunities. PwC suggests that companies “keep an eye open for M&A opportunities, as distressed assets or non-core assets may be a potential source of cash for embattled companies.”4 No matter which direction companies are taking, all of their efforts could prove fruitless if their respective target markets are unaware of these changes. For instance, how will your customers know that your restructuring efforts are focused on improving the ease of doing business? How will they learn of your improved responsiveness? How will you communicate with your foreign markets and explore possible new opportunities? This is again, where partnering with language services becomes integral to the overall reorganization process.
Protect your Downside and Maximize your Upside with PGLS
We know. We get it. We are all “so over” COVID but it would be irresponsible for us to ignore its impact on our respective businesses and counterproductive to overlook innovative ways to not only survive but thrive. With a background in organizational restructuring processes, PGLS has successfully consulted and partnered closely with our clients as they navigate their own reorganizations. We offer invaluable insight on how to move forward in both good times and in times of crisis, keeping language services at the forefront. In fact, we too, have successfully completed our own acquisitions and look forward to more in the coming years. PGLS doesn’t just understand the reorganization game – we anticipate, predict, and plan for it, for our future and the future of our partners.
Although COVID-19 has likely changed our world permanently, we will never stop communicating. In fact, the need to communicate in multiple languages has only become increasingly more critical across all walks of life, platforms, and industries. With our expertise in the overall reorganization process coupled with our background in translation, localization, and interpreting, we’ll help you gain access to emerging M&As and connect you to new growth opportunities. Of course, we expect you to evaluate your current LSP and we strongly encourage you to compare how PGLS stands out above the rest. We’re more than just another LSP – we’re Piedmont Global Language Solutions. We’ll work hard to help you protect your downside and maximize your upside. Reach out today and experience the PGLS difference.
Based in the greater Washington, D.C. area with team members across the world, Piedmont Global Language Solutions (PGLS) is backed by over 70 years of combined experience in the language services industry. We provide top notch services to numerous companies and government agencies. Our tested processes and resources allow us to offer outstanding solutions in the areas of Translation, Interpretation, Transcription, Training, Cultural Sensitivity Training, Language Instruction, Localization and more. Our network of language professionals specializes in more than 200 languages and regional dialects.