My fingers (and toes) are crossed that this government shutdown will be short-lived. Most are resolved quickly, but this Fenwick alert says companies need to plan for the possibility that this shutdown may be dragged out. It says, “public companies should evaluate and understand which critical functions of their business depend on the federal government, consider potential delays, maintain robust disclosure and communication strategies, and ensure contingency planning is in place.” Specifically:

Shutdowns can increase uncertainty in markets. In this light, companies should proceed with caution when providing any forward-looking guidance and ensure they are basing any such guidance on realistic assumptions.

Companies should evaluate the potential impact of the shutdown on their cash flows and business operations, particularly if the company depends on government payments or regulatory approvals for revenue recognition or operations.

Companies should also ensure their disclosure committees are aware of potential shutdown impacts.

With a longer-term shutdown, companies may also be considering disclosing how the curtailment of government operations might affect their operations and financial performance. The alert says that corporate communications strategies should address:

– Potential impacts of the shutdown on current quarter earnings

– Delays in regulatory licensing, permits, inspections, communications and other approvals

– Supply chain disruptions and risk mitigation efforts

– Contingency plans for extended shutdowns

– Meredith Ervine