Zombie companies barely benefit from NOW

Reading Time 5 minutes | Written by Anne de Geus | May 3, 2021

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An Altares Dun & Bradstreet analysis of 93,000 companies that received support through the NOW scheme shows that, relatively speaking, the most active organizations also received the most NOW support. So it's not the "zombie companies" that are sitting back and benefiting from support.

Rotterdam, May 3, 2021 - It is the most active organizations that relatively speaking also receive the most NOW support. Of all NOW recipients, 83 percent are average to very active, when it comes to sending invoices and paying bills, for example. This is according to an analysis by business data specialist Altares Dun & Bradstreet of the more than 93,000 companies that received support through Temporary Emergency Measures Bridging Employment (NOW). The least active organizations also receive the least support. So it's not the "zombie companies" that sit back and benefit from support.

SME largest customer

As the number of employees increases, percent more organizations apply for NOW, with a peak among companies with 21 to 101 employees: 34 percent of them receive NOW support. Thus, the support comes mainly to SMEs. Organizations with more than 100 employees manage better without the emergency measure.

Financially healthy companies

Altares Dun & Bradstreet provides companies with a credit rating , with the number 1 being the best and 4 the worst rating. An analysis of these ratings shows that the vast majority of organizations awarded NOW support were financially sound on January 1, 2020. In fact, 17 percent had the highest Dun & Bradstreet rating 1 and fifty percent had rating 2. Only 6 percent of all 93,085 organizations receiving NOW had the lowest rating 4 on that date, representing 11.5 percent of all Dutch organizations with that rating. Moreover, most NOW recipients are punctual payers; for example, 99 percent of NOW recipients had not been involved in a collection process for at least 36 months.

Joris Peeters, Chief Data Scientist & Strategic Consultant at Altares Dun & Bradstreet: "It was frequently cited in the media that 'zombie companies' benefit from the NOW support. Our analysis shows this not to be the case, only a small portion of the companies receiving the support are low activity. On the contrary, the companies receiving the NOW are those that were financially sound until before the corona crisis, with high credit ratings and no collection projects. SMEs in particular have been hit hard in the crisis and we see this reflected in the figures. According to our analysis, the support is getting to the right places and hopefully helping to keep the economy going."

About Research

The companies that received Dutch government support are known by name. 137,155 companies received financial assistance in the first package of support measures (NOW1), and 63,629 companies in the second round (NOW2). The government provides the name and location of these 200,784 organizations; it does not share more information. That was the input for our analysts.

We held that long list next to our rich database, and looked at which companies matched with certainty. We dropped companies that appeared twice in the government's published lists, because they received both NOW1 and NOW2. Companies were dropped for which we could not establish a match with our database with certainty, for example, a company like 'Jansens' from Amsterdam. And companies were dropped that did not appear in our database on January 1, 2020, for example, because they only started after that.

This left 93,085 companies that received government support and for which we have financial data dated January 1, 2020. We deliberately chose that date because the outbreak of COVID-19 did not yet affect the financial position of individual organizations at that time. This data tells us how the organizations that eventually received NOW support were doing before the unforeseen crisis erupted.

Read the entire study

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Anne de Geus

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