M&A and the impact on staff: Part 5, Starting a start-up

Photo: © Convisum | Dreamstime.com

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.

(This is the final of a series of stories originally published as a single story on Loadstar Premium at the start of August and  available for subscribers to read here)

Freight forwarding is beautifully asset-free. It used to be a bloke with a phone. But times have changed.

Now it might be a woman with a laptop.

There are few barriers to entry to start a small forwarding company, which is why it remains a highly fragmented market. Even after taking huge bites, even DSV still only commands about 7% of total market share.

So there is a temptation, if a role has been lost, to start out by yourself, with nothing more than a phone-full of contacts and –  hopefully – a payout from your former company.

Edna Ayme-Yahil, formerly of Panalpina, said that was one option after the Swiss company was taken over by DSV.

“Some people, rather than returning to another corporate role, take the opportunity to launch their own ventures, either in small groups or as solo-entrepreneurs. I know several people from Panalpina who have done this and they are doing just great.”

Others are more pessimistic.

“It may depend on what capital expenses you have. I think it’s hard,” said Mr Swiss.

“A niche segment, such as perishables, has potential. But if you compete with general business, I think it’s very hard. You need to have investors. Is the return on investment lucrative? I don’t think so.

“And you still need global reach. You cannot just be a transatlantic forwarder, you need transpacific, and hundreds of agents. So I think that’s not going to happen. I don’t think that’s the future.”

But if you do, one day you too can look to join the merger mania and sell your forwarding company to one of the big beasts. Those companies looking for bolt-on deals will keep finding new feedstock in a market which simply renews itself.

“Plan your exit, and you may place several million extra dollars in your pocket,” explained Ron Lentz, managing partner at Logisyn Advisors.

In the meantime, the logistics sector will continue to consolidate – and fragment.

“Logistics will always be somewhat fragmented,” agreed Mr Swiss.  “After two or three years following this Schenker integration, DSV will be looking to buy the next one – it’s in their DNA.”