Consulting Magazine - February 2017

regulatory environment, which should ease
compliance spending and improve trade flow
and development,” says Ernst & Young LLP
Principal, Advisory Go To Market and Sector
Leader, Mark Hawn. “Industries most likely to
benefit would include financial services and oil
and gas.”
Other policy changes, such as the imposition
of new trade tariffs or curbs on immigration,
could create hurdles for retailers and the tech-
nology companies. Based on what the President
expressed during his candidacy, immediately
after his election, the following industry chal-
lenges seem likely to materialize:

 HEALTHCARE: The fate of the Affordable Care Act (ACA) looms one of the largest business issues in early 2017. The law’s repeal would significantly affect healthcare providers and payers (i.e., insurers) as well as small business across all industries. National and regional insurers also face the possibility of competing across state lines. Additionally, a major corporate tax cut would benefit insurers given that their business is U.S.-based. Life sciences companies are contending with pushback on drug prices and where they manufacture their products (in most cases, outside the U.S.). The biggest questions, however, concern the ACA. “Will it get repealed?” Cahill asks. “Will it be replaced? At the moment we have no idea what, if any, aspects of the law will be allowed to survive. We also don’t know what a repeal would mean to the slowly evolving migration from fee-for-service to value-based pricing. And what will it mean to that doctor shortage that we talked about a few months ago?”

 PUBLIC SECTOR: Consulting leaders expect significant headcount reductions at the federal level, new missions for certain agencies and departments, and a greater emphasis on public-private cooperation. State-level pub-lic-sector agencies are also expected to assume more authority. The public sector “may be the industry that undergoes the most change,” Sastry observes.

 FINANCIAL SERVICES: Regulations adopted following the global financial crisis (namely

Jim DeLoach, a Protiviti managing director, identifies a number of specific steps for companies to consider while watching how policy and legislative proposals play out during the next six months or so. Some of these recommendations are also useful for consulting firms, including the following:

 Watch the initial developments on trade closely – These issues include possible resets of the North American Free Trade Agreement and the Trans-Pacific Partnership as well as ways to address trade issues with China. “How these and other policy initiatives play out can significantly affect companies’ operations in, or exports to, these foreign markets and even critical suppliers based in these markets,” DeLoach notes.

 Prepare for more discretionary spending capacity – The corporate tax rate could be slashed to 15 percent. If this and/or similar tax changes materialize, many companies will have an enticing challenge to address: How will they deploy the additional cash flow and/or repatriated funds? Possible answers, according to DeLoach, include making new investments, pursuing merger and acquisition (M&A) targets, pulling deferred projects off the back burner, expanding facilities, upgrading systems, enhancing compensation structures to retain talented employees and more.

 Update M&A plans/strategies – The possible changes described above along with the likely trend toward deregulation may encourage more M&A transactions. “Companies should take these changing dynamics under consideration,” DeLoach adds, “and assess their M&A appetite in view of their overall corporate strategy and the economic climate.”