M&A and the impact on staff: Part 3, Takeover time

DB Shenker’s Jochen Thewes in a ‘propaganda photo’ with DSV’s Jens Lund. Mr Thewes has since quit.

This business is all about people.

It’s about relationships, the daily toil achieved together. The experiences you share, the problems overcome. It can be thrilling, exhausting, fun, dreary.

And who you work for is a major part of that. Not just your manager or CEO, but the company itself. Its culture, its benefits, its ethos. And companies – as a single entity – can often forget that how they behave, and what they do, affects the hive.

They say moving house is one of the most stressful things you can do. M&A is the corporate equivalent. The impact on staff is huge, and oft neglected in the noise over money, and shareholders, and integrated processes.

So we are running a short series of articles on takeovers and the impact on staff, with a historical look at DSV’s strategy, and what it has meant for all those caught up in the Danish company’s merger mania.

Some names have been withheld. Our ex-Panalpina manager is Mr Swiss, a former DB Schenker manager is Ms Essen, and ex-DSV account manager is Ms Copenhagen.

TAKEOVER TIME

It keeps happening. First the rumours start: ‘DSV on the buying trail again’. Then acquiree names start to come into focus – whether it be UTi, Agility, DB Schenker. Next, the scramble for gossip and market manipulation, led by unhappy investors or rivals trying to change what is now becoming an inevitable outcome: DSV bites again.

For those working for either the acquirer or acquiree, life becomes challenging.

“I’m a sports guy,” explained Mr Swiss. “It’s the same thing – if you have a merger of two teams, most likely you don’t need two coaches, you’re going to need one. Now, the coach at the other team, the head coach, is he willing to be the assistant coach?”

And so the process of filtering-out jobs begins. But not all is what it seems.

Ms Essen explained: “It started with the organisational change, in order to make some kind of deal possible. DB Schenker was in such a shape that nobody would want to buy it, or would buy it with a low price tag.  So when we started this transformational process, immediately it sparked some interest – something is happening.

“Nobody knew what, though. Then all of a sudden there were lots of consults, lots of big meetings and semi-transparent communication. Yes, we are changing.

“People on the lower levels, especially in individual countries, started to say,’we are being sold’.

“I wouldn’t say people were worried that much, because Schenker had acquired many companies and many employees who had stayed with the company. And to them, it was really difficult to explain why any further acquisition would be any different. ‘Just another new boss’ was probably what the majority thought.”

And in the media come pledges of job retention. With DB Schenker, the promise was that DSV would retain the majority of German jobs for two years and, ultimately, would offer more German jobs at the combined company than there were previously.

“They had to say that, because of German law,” explained Mr Swiss. “In each country the laws differ. But it’s natural that you don’t want two of each role.

“I think normally at the takeover, especially with DSV, it is already scripted who they want to retain, who they will maybe keep for a year or so;. that’s already pretty much set in stone, I’m convinced of that. I would be cautious of any promises made.”

Dr Ayme-Yahil said: “What’s it like to be taken over by DSV? Horrible.

“The problem is that DSV has taken over many companies and each time it is the same story: shareholders love it and yet the destruction of human capital is immense. If you care about people, it is painful to watch thousands of your colleagues have the rug ripped out from under them.

“I was working so hard the weekend before the announcement of the Panalpina takeover (1 April 2019), and in the subsequent months during integration, that I barely had time to think until the exchange offer was complete on 19 August.

“I think it really hit me when I had to write an announcement about the departure of my boss (then Panalpina CEO Stefan Karlen) and take it to him to have him validate the press release. I returned to my office and just burst into tears.

“I had committed to stay for six months after the completion of the takeover, but I was really dreading that six months – and was relieved when DSV CEO Jens Bjørn Andersen called, to fire me, in September. I really needed my ‘gardening leave’ to recover mentally and physically from what had happened.”

Most people said that DSV’s integration processes were smooth – but that doesn’t prepare you for a challenging future.

“I wouldn’t say they destroy everything, but they put their own, DSV, DNA on it, which makes sense because it’s their company now,” explained Mr Swiss.

“But they put out those little propaganda videos, where it looks like you’ve won, but you really haven’t – and you are going to be DSV. It looks nice, and the script, the way they do it, is very well thought through.

“They’re seasoned, they’re really good at it.

“But now you’re not allowed to have a little DB Schenker truck on your desk, because you’re DSV. And the people you’ve been connecting with over 15 or 20 years, suddenly you have to  tell them, ‘okay, bye’, and here’s your little package. It’s not so easy.

“For some people it’s super easy, because they have done it 15 times before. But for others, it’s a little bit harder.”

Ms Copenhagen, who said life under DSV was “brutal”, explained: “There were different announcements because of the acquisition and so on. They mentioned that they may change the structure. I emailed my manager to ask to change team.

“My boss called me to say ‘I’m sorry, but after your email, I have no choice but to let you go. Do you want to resign? DB Schenker is coming with so many people’. There were four people doing what I was doing.

“When I left, people in the office said it was a pity, because we were always too focused to chat with each other. We didn’t have time.

“They treated me as a commodity, and then they just threw me away.”

But everyone’s experience is different. Ms Essen left DB Schenker before the merger was completed. But she said: “I if I had remained in the Schenker head office, I think I would be thriving in DSV.  I believe they provide opportunities if you’re ready to take them, where DB Schenker didn’t help you find your right place in the organisation,

“Is DSV a better option than Schenker? I don’t think that’s so for everyone.

“Not every person knows exactly how to create their own path. Some people rely on management to help, and in each office and country the level of education is different, and the level of exposure to strategy is different. So I think for some it’s going to be a little tough to be thrown into this ambitious and dynamic environment.

“But on the other hand, I think DSV understands this as well, that two cultures are clustering and it’s their job to make it not a clash, but rather a smooth integration. It’s not their first acquisition, they understand it’s in their best interests.

“But I thought to make it work they would invest in consultants and additional training, and to actually build new teams. What I see on social media just looks like DSV is going to eat them all alive.

“But it takes two to build a relationship, and the Schenker team is too strong just to be dissolved.”

That may turn out not quite the case – the senior management team has gone, for example. And already, the talk is of who is next.

“You have to give DSV credit. They have a very good M&A team. It’s in their DNA and I’m sure in the next two or three years they will get another forwarder,” said Mr Swiss.

Next up: What should you do if your company is involved in a merger? “Prepare yourself mentally.”

(This full series was published as a single story on Premium last week, and is available for subscribers to read here)