Top 5 Themes Influencing Business Decisions Today

With month one of 2021 behind us and year-end earnings getting underway, many business leaders are thinking about the outlook for the year ahead. From employee policies and procedures around vaccines, to return to the office strategies, to embracing technology to drive new customer experiences and efficiencies, to looking for avenues of growth in a disrupted marketplace — business leaders are aggressively managing how best to engage effectively across the country. 

And as the role of business leaders takes on new importance in our society and our actions impact more than what’s inside our four walls, we have much to consider and even more to do. My recent discussions with senior executives and investors, spanning multiple industries, have revolved around five key themes of late: 

1. What Biden’s administration means for the business community. The new administration is prioritizing its proposed $1.9 trillion relief plan aimed at strengthening the US economy and accelerating pandemic response. In addition to this, we are also likely to see key changes in the tax, public policy and regulatory landscape, all of which will presumably impact corporate planning scenarios. Understanding what those impacts are and how to respond to them will be key. It will also be important for companies to keep an eye on the agendas of various other cabinet members and agency leaders, specifically around policies relating to ESG disclosures, capital raises, consumer protections and digital currencies. All in all, as the degree of federal government intervention — and intentions — becomes more clear, it will continue to impact the next stage of recovery for society at large and the broader financial markets. 
2. A strong outlook for the 2021 deals market. The activity from the deals market in 2020 has paved the way for significant activity in the year ahead. A newfound love for special purpose acquisition companies (SPACs) as a convenient vehicle for organizations to go public saw 250 companies raising over $75B in 2020, a record for SPAC proceeds and volumes in a single year. And a significant number of megadeals (deals in excess of $5B) in the second half of last year capped off 2020 with a hot M&A market. Given this, we can expect the capital markets to be busy again in 2021, driven by low interest rates, vaccines becoming more widely available and significant amounts of dry powder available to be deployed. 
3. Readying for prime time in the private markets. Investments are continuing to flow into the private markets, made up of private equity (including venture capital), infrastructure, real estate and private credit. The pandemic has forced those managing private market firms to face challenging economic conditions and a more complex definition of what constitutes value. Given this environment, the private markets are expected to grow by $5.5T to $15T by 2025. What we’ve seen is that there has been a significant decline in publicly listed companies in the last 20 years, and a shift to a rapid increase in private companies with over 500 employees. As this trend continues companies will need to develop and refine their value creation playbook.
4. What today’s unemployment levels mean for Q4 2020. It has been interesting to see that despite the toll the pandemic continues to take on American workers, earnings results reported out of the gate from our nation’s largest banks have been generally positive. However, new unemployment claims remain high compared to pre-pandemic levels. While the banking industry saw profits buoyed by investment banking and trading gains, rather than from their consumer segments, we will need to keep a close eye on earnings reported across other sectors, as well as their outlooks for 2021. How the equity benchmarks respond will be telling, especially given the Dow and S&P 500 reached historic highs and the Nasdaq posted its best annual return since 2009 by the close of 2020. Ultimately for our economy to thrive again, we cannot lose sight of job creation and getting our people back to work. 
5. Planning for the return to the workplace. The start of vaccine distribution has provided some positive momentum for our communities early on. Though businesses are eager to move forward in a post-pandemic world, organizations can’t simply return to business as usual. Given this, organizations must think through what return to the office will mean for them, their people and their geographical footprint. Many organizations have embraced the flexibility of remote work and may likely implement a hybrid working model post-pandemic. The effects of workforce planning will have critical implications for the foreseeable future, including customer behavior changes, real estate costs, employee morale and collaboration and technology adoption. These will all play a role in what the future of our businesses and cities will look like. 

This year we have an opportunity to create a “new normal” for business, a chance to rework existing strategies and identify areas to streamline and invest in. While the year ahead will involve rethinking processes and ideologies that have historically been in place for some time, the opportunities for growth and innovation are real.