Seven Smokin’ Hot Buttons

Economic Uncertainties & Preparing for the Future—“Cash is King”

“I think first and foremost what’s on directors’ minds is the business and what do they need to do to prepare for the future, in terms of growth and profits, while addressing what needs to be done now in order to deal with the down turn,” says Sullivan & Cromwell’s Morphy. While the economy is showing signs of recovery, board members should still be asking themselves, “how do you guide your company in the most challenging business condition?” suggests Ropes & Gray’s Jones. Board member Bernard C. Bailey thinks that during these times, “companies are still looking at really managing the balance sheet and capital structure of companies. How do you manage balance sheet, cash flow, and liquidity of a company? I believe that goes beyond the audit committee because it deals with some of risk assessment.”

During these uncertain economic times, “cash is king,” declares Cifrino, of McDermott, Will, and Emery LLP. “Companies need to be vigilant about liquidity. I find that [public] companies need to be proactive in ensuring liquidity for their companies. Lenders are not in a mood to be generous in terms of lending. Boards should push management to explain what’s the plan now. Develop a strategy to deal with retooling the balance sheet, do what you can to assure liquidity. It’s all about cash generation.”