Have you ever heard of Zombie Companies?  I’m not talking about some B-grade horror flick.  These companies are for real, and they are everywhere!

What are Zombie Companies?

By definition, Zombies are companies that earn just enough money to continue operating and service debt, but cannot pay off their debt.  These highly leveraged companies generate enough revenue to cover operational costs and meet interest payments on debt, while they struggle to reduce corporate debt and improve their balance sheet.  Zombie companies often lack the corporate resources needed to make capital investments to position for growth.

During Quantitative Easingread Cheap Money—lower long-term interest rates provided access for zombie companies to use low-rate loans to feed cash into (oftentimes money-losing) operations. Pandemic-era assistance programs helped keep the economy afloat and propped up highly indebted companies.  Even during the pandemic, concern mounted about the ability of zombies to handle repayment.  And that was a period still in the era of cheap money.  With the rate increases implemented by the Fed, it’s time to pay the piper, which spells trouble for highly leveraged companies.

Read the story attached below to learn more about zombies.  You may be surprised at some of the household names in the category; one may even be your favorite sports team.  What do you think about Zombie Companies?  Is it an apocalypse or more of just a B-grade movie scare?  Let me know by reaching out to me here.

~ Brian Kasal- The Leadership Matrix

Click here- Zombies: Ranks of world’s most debt-hobbled companies are soaring, and not all will survive

An Added Bonus-  Here is a performance by the 60’s British band The Zombies, during their induction into the Rock Hall of Fame in 2019.  They are performing their first U.S. hit from 1964, “She’s Not There”- Enjoy!     Click Here- Rock&Roll Hall of Fame- The Zombies- “She’s Not There”

P.S.- Did you see my last Leadership Matrix post?  The Shifting of the U.S. Population

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