Only a few months ago, most analysts were saying that theeurozone debt crisis was easing. Greece had accepted an austerityplan in return for bailout funds, Italy and Spain had conservativegovernments that promised to put their financial houses in order,and the euro was holding firm. Then came the Greek elections, wherevoters, fed up with austerity, rejected both major parties andFrance's election of Socialist Francois Hollande, who vowed tocombat the German-led policy of financial austerity.

Suddenly, it seems quite possible that Greece will exit theeuro. Spain, Portugal and Italy could be in trouble as well, maybeeven to the point of quitting the euro.

What's a U.S. company with factories, suppliers or major marketsin Europe to do?

In a new report, Breaking Up Is Hard to Do,PricewaterhouseCoopers says the key thing is to prepare for whatmight happen, rather than just waiting for moreinformation. “There are a lot of different possible scenarios, andthings could happen very quickly or over a prolonged period,” saysPwC partner Shyam Venkat, one of the report's authors, pictured atright. “But the key is doing your homework.”

The report offers four scenarios: A concerted rescue of theentire eurozone that would entail recession, slow growth andsignificant inflation; voluntary defaults for the zone's moreindebted nations, starting with Greece; an exit from the euro byGreece, followed by a firewall protecting the zone's remainingmembers; or a falling away of all the weaker, more debt-burdenedeconomies, including Greece, Portugal, Spain, Ireland and Italy,and establishment of a strong but smaller eurozone composed ofGermany, France, Holland and Finland.

“Regardless of what happens, companies can andshould be thinking about how they would deal with currencycontrols, about their suppliers, about how a devaluation wouldaffect reported profits from European sales, and about investmentdecisions on where to source and where to sell,” Venktr says.

Among the steps PwC suggests: Moving cash out of euros intosafer currencies; negotiating shorter supply contracts in theeurozone; setting cash aside for bond repayments; increasing cashreserves; and assessing net euro exposure.

U.S. companies today, Venkat says, exhibit a range of responses,from a wait-and-see attitude to setting up multidisciplinary teamsto plan and prepare steps that could be taken. “It's a little likebaseball,” he suggests. “You can't know if you're going to get acurve ball, but you're better off if you're prepared to have onepitched at you.”

Brian Kalish, finance practice director at the Association forFinancial Professionals, says most treasurers and CFOs he meets arenot preparing for such a challenge. “For most of them, it's kind ofwait-and-see,” he says. “There's a kind of crisis fatigue at thispoint, and a sense that, 'Hey, Germany's going to save us.'”

Companies may also be overconfident about their ability to hedgeagainst the problems in Europe, but as JP Morgan Chase CEO JamieDimon can attest, the benefits of hedging can be overrated.

Axel Merk, president and CIO at Merk Funds, offers another bitof advice. 'Monitor capital flows closely,” he says, “because thatwill warn you if the market thinks a country is likely to defaultor leave the eurozone.”

The PwC report, Breaking Up Is Hard to Do, is here.

For an earlier story about the practical implications of theEuropean debt crisis, see BreakingUp the Euro.