M&A and the impact on staff: Part 4, Merger mental health

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.

MERGER MENTAL HEALTH

In all the hullabaloo of a takeover, no one talks about the impact on staff mental health.

But it’s significant.

All the things that steal the limelight in a merger – the value of the company, investor sentiment, customer retention, regulatory hurdles – make no real difference to staff.

For employees, the only key thing is company restructuring, and what roles will remain.

Are they buying your company because they want to retain it – or shut it down? Will you have to fight it out with your counterpart? Is it best to resign now, before everyone else hits the job market? Is it an opportunity to get a more senior role? And, if you are located outside your home country, will you be able to stay?

There is a lot to think about. And a lot to stress about.

“With those mega mergers, it really depends on which section you are in. There is a big separation between desk folk, higher management, and agents,” explained Mr Swiss.

“With higher management, in general, the whole thing is already scripted. I think if you’ve been at a place for 30+ years and never been through it, you are probably a little naive and believe you have a chance to stay. But I think history has shown, with the last four DSV mergers, the chances of retention are very, very slim.

“If you get acquired, you get acquired. I mean, there’s only one company that rules. It’s not a democracy.”

Mr Swiss was not alone in his pessimism.

“The reality is that most people will (eventually) lose their jobs,” said Edna Ayme-Yahil, ex-Panalpina.“This is especially true if you are in a senior or middle management role, or work for a support function like IT, HR, etc.

“While this can be a shock initially, I have seen with Panalpina that the vast majority of people land on their feet within a year. It’s important to wait to see what happens rather than quit, as severance packages can be quite generous (but this depends on local legislation). There also may be retention incentives for certain critical jobs, or individuals at a high risk of flight, where DSV or the acquirer needs the individual to remain in order to complete the transition.”

Uncertainty is the overwhelming feeling, people at DB Schenker told The Loadstar. Ms Essen said: “I think nobody knows who’s going to stay or leave, and that creates uncertainty. Even on the C level, I think even board members didn’t know.

“When we found out about the acquisition, it was all moving so slowly, so the uncertainty was higher up the chain of the command. Usually people think that all the big bosses know everything, but they don’t.

“Those from the acquired company appointed to the managing positions didn’t know until they were chosen.”

What to do under these circumstances differs depending on the role and location, said Mr Swiss.

“I think it depends where, because you have different labour laws in different countries. At the end of the day, if you’re in Germany and you have a legacy 10 or 20 years at a company, you’re protected differently than in the US, where if you don’t have a contract, you’re gone in two weeks.

“My advice would be talk to other folks who got acquired by the same company. Look at the history in different levels. If somebody’s on a desk level, the chances of staying are probably slim. If you’re in middle management/upper management, maybe start looking around a little bit now, or at least get better prepared. You may have to step down one or two levels. It also depends on the flexibility to relocate, and whether you are close to retirement.”

That is the case with ‘mega mergers’, as Mr Swiss put it. More normal M&A would see a smaller company bought as a bolt-on – in which case there can be a quite different outcome.

“I’ve seen DB Schenker buy a long-term partner, a close partnership with a family-owned business,” said Ms Essen. “From the employee perspective, there was not such a big change, because they’d been working with the same systems and with the same people. And because of the geographical element of the deal, there were not too many overlaps, so the people integration was quite smooth.

“It depends case by case, country by country. There may be bad blood between employees, trying to prove that they are worthy of a position, or sometimes it’s a really friendly integration where people knew each other from previous roles.

“That kind of merger is more like a marriage after a long-term relationship.”

Not so with the mega mergers, which can cause undue stress.

“It would be nice to understand a little bit more the human aspect of those mergers. It is epic,” said Mr Swiss. “The company focuses on the next four quarters, and where the company is going to be. That’s fine, but you also have some people who find it affects their mental health. I know people don’t want to talk about it, but that’s also the reality of having a successful mega logistics company merger.

“If you’ve been with a company for 20 years, you may not think rationally, and understand that the only result that matters is the black and white of the bottom line, and it’s all results-driven. You may have an emotional attachment, and worry about your family.

“It’s not a nice experience if you don’t prepare yourself mentally for the takeover. I think that’s my conclusion. You might still end up losing your job, but at least you were potentially a little bit better prepared, versus losing your job out of the blue, which can tear families apart and really be a burden, mentally and physically.

“If you go into a takeover and think you have a fair chance, I would caution against that.”

Ms Essen explained that some people identified more closely with their jobs than others.

“You have to ask yourself, ‘if I get laid off, how big of an issue is going to be, is it going to be a kick to something new, that I’ve been waiting for?’. Other people get paralysed by fear, wait for something bad to happen, and then react.

“The first thing is ask ourselves what do we want to do, where do we want to go, and do we want the circumstances to lead us to a specific direction? That’s good practice not only when a company gets acquired, but also in day-to-day life.”

Ms Ayme-Yahil concluded with this advice: “Stay calm, but don’t be naïve.

“While you are waiting to find out what happens, it’s important to start working on your CV and network locally. Talk to people you know even casually – you never know where your next lead is for a new job.

“During mass lay-offs, other employers in the industry and the market know what is going on and are going to seek out talent very quickly. I was approached almost immediately by headhunters, consultants and a few companies once the news of the Panalpina takeover was announced, and it was the same for a lot of my colleagues.

“Finally, if you are living in a foreign country, where you and your family require visa sponsorship, make sure you understand what the legal ramifications are when you lose your job. Will you qualify for unemployment insurance? Will you be allowed to remain and work in that country? Do you have kids in local schools? Make sure you understand what your options are so you can go in informed to speak to HR and try to negotiate what you need in this specific situation.”

Next up: Starting a start-up

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