May 18, 2020

The Fire Next Time? CFOs Say Contingency Plans Lacking for Covid-19 2nd Wave

As the U.S. slowly reopens for business, we’re already hearing warnings that a second wave of the pandemic is likely heading our way in the fall. Since that’s the case, a recent Gartner survey finding that 42% of CFOs have not addressed a potential second wave in their planning for the remainder of the year is a little disconcerting. Here’s an excerpt:

A Gartner, Inc. survey of 99 CFOs and finance leaders taken April 14-19, 2020 revealed that 42% of CFOs are not incorporating a second wave outbreak of COVID-19 in the financial scenarios they are building for the remainder of 2020. Additional survey data showed that only 8% of CFOs have a second wave factored into all their planning scenarios, and only 22% have a second wave factored into their “most likely” scenario. The lack of planning comes even as CFOs express a cautious approach as to when they will fully reopen their operations and bring employees back to their normal office routines.

“As CFOs are attempting to project revenue and profits for 2020, it’s surprising that 42% are not baking a second wave of COVID-19 into any of their scenarios” said Alexander Bant, practice vice president, research, for the Gartner Finance practice. “Our latest CFO data also reveals that most executive teams are still trying to decide what factors they should use to determine how and when to reopen their offices and facilities.”

In fairness, this survey was taken a full month ago, and a lot has changed since then. But with the Covid-19 pandemic already spawning securities litigation, the potential lack of preparedness for a second wave presents governance and disclosure issues that may make attractive targets for plaintiffs.

IPOs: SPACs Ride High in April & Don’t Get Shot Down in May

The Covid-19 related turmoil in the stock markets during the past few months has put a damper on IPO activity, but this WSJ article says that April was a boom time for SPAC IPOs. Here’s an excerpt:

The companies raising the most money in the IPO market right now have no revenue, aren’t profitable and lack long-term business plans. That is by design: They are blank-check companies, whose purpose is to raise money for acquisitions. So far this year, these special-purpose acquisition companies, or SPACs, have raised $6.5 billion, on pace for their biggest year ever, according to Dealogic. In April, 80% of all money raised for U.S. initial public offerings went to blank-check firms, compared with an average of 9% over the past decade.

SPACs accounted for $2.2 billion of the $2.6 billion raised in IPOs last month, and they’ve raised another $575 million so far this month. The article suggests that investors’ fondness for SPACs arises from their belief that “there will be good deals to scoop up when the coronavirus subsides.”

Tomorrow’s Webcast: “Political Spending – What Now?”

Tune-in tomorrow for the webcast – “Political Spending: What Now?” – to hear DF King’s Zally Ahmadi, Skadden’s Hagen Ganem and Wilmer Hale’s Brendan McGuire discuss an overview of the current climate for political spending, corporate governance/board oversight, key considerations for political spending policies, political spending disclosure, shareholder engagement and shareholder proposal trends and voting behavior.

John Jenkins