As a result of the complicated situation related to the COVID-19 pandemic, 24% of surveyed companies are considering restructuring their business, according to the KPMG report Perspectives and sentiment of entrepreneurs.
Among the companies participating in the KPMG survey, 24% of organizations declared that they plan to restructure. The most frequently indicated reason for planned restructuring by entrepreneurs is the improvement of financial liquidity, which 42% of respondents want to achieve. 37% of companies declared that the planned restructuring is the result of a previously adopted strategy. business, and for 1/5 of the organization, the restructuring will allow to focus on running the core business. The current economic conditions are a good time to sell the company or restructure the entire business or part of it, according to 16% of respondents.
More than half of the surveyed companies assessed that the situation in which their company is located is average or bad. 38% of respondents described the situation of their organization as good, and another 10% declare that the current situation of their companies is very good. Worse moods of companies can be noticed in the case of projected development in the coming time. According to 4 out of 10 respondents, the company’s development in the coming months will be good or very good. According to 55% of respondents, the development of their companies will be medium, bad or very bad. The development of the industry in which their company operates, forecast by entrepreneurs, is similar – 44% believe that it will be good or very good, while half of the surveyed companies believe that the development of the industry in the near future will be medium (33% indications), bad or very good. bad (17% of responses) was also indicated.
For the vast majority of companies currently in a difficult situation, the most frequently reported problem is the reduction in sales, indicated by 83% of respondents. 27% of companies declared that they are struggling with the problem of loss of financial liquidity, while 1/4 of the organizations indicated that running a business is hindered by higher prices of materials or services. For 20% of companies, the challenge is high competition in the industry. The difficult situation in most of the surveyed companies is caused by the COVID-19 pandemic – this view was expressed by 78% of organizations. 12% of companies were unable to say whether their current problems are the result of the negative economic effects of the COVID-19 pandemic, and only 10% of respondents declared that their current troubles are not related to the outbreak of the coronavirus pandemic.
“Restructuring planning is best started with an analysis of the advantages and disadvantages of the available scenarios, including the tax consequences of the envisaged actions. Effective preparation of restructuring requires a comprehensive and interdisciplinary approach, also covering a number of tax aspects. Even in the current pandemic situation, tax authorities pay special attention to business justification for the activities carried out with particular emphasis on the restructuring “- said Honorata Green, partner, head of the Tax Team at KPMG in Poland, quoted in the material.
Among the restructuring scenarios most often mentioned by companies, there are primarily plans to merge with another company or liquidate the current business. The next places are plans for the bankruptcy of the company and the transfer of business functions within the capital group. Among the entrepreneurs currently planning restructuring, half declared that they had carried out an analysis of the potential impact of the planned restructuring on the current operations of the company, and 16% had such an analysis in their plans. 1/5 of companies planning to restructure admit that they have not conducted an analysis of its impact on their business activities, it was underlined.
“The COVID-19 pandemic factor alone may not be a sufficient business rationale for the restructuring to be undertaken. Consequently, the lack of appropriate justification may result in the risk of entering into a dispute with tax authorities, for example regarding the tax neutrality of a merger or division. taking any actions aimed at restructuring the conducted activity, a thorough and multilateral analysis of the potential effects and risks of taxation should be carried out. It is also important to prepare an appropriate economic justification along with a detailed plan of activities to be performed in order to eliminate potential disputes with tax authorities “- indicated the director in Tax The Mergers and Acquisitions Team at KPMG in Poland Małgorzata Gleń.
