Comparing the Panalpina acquisition to other M&As - what lessons can be learned?

Almost every past employment exposed me to Mergers and Acquisitions (M&As) whether it's good luck or bad. Many arrived after implementing initiatives by myself and others e.g., improving safety, and accident reduction, process improvements, tackling claims, and warranties and then involved with customers and sales tenders; it was hard work but worthwhile. M&As teach us things, about companies and people, from lead-up to consolidation, how they're done, those who care about colleagues struggling, the experienced influences and those encouraging resignations (i.e., lower redundancy costs etc.). As this takeover appeared at a time of great personal change for me, struggling to finish two professional qualifications, managing family and friend's deaths and enduring a short-term health shock, I had to wait it out.

Panalpina (PAN) acquired many smaller freight forwarders themselves. With many of these, I was sent in right after to analyse risk to look at claims, accident data, systems and certifications, and help identify mitigations, which is not easy if hidden, the joys of being disliked on arrival. However, it is always important to show respect to those facing uncertainty, being professional yet remaining steadfast. With this episode, I looked back last year and was amazed at how publicly it was played while we were too busy earning money to notice - Fcks Sake. Here, I compare this acquisition to others and ask you, can they be done better?

October 2018 - The Chairman became involved in a public spat with a volatile shareholder, who constantly criticised our financial performance publicly e.g., "You are top-heavy", "too much staff", "not enough profit, blah blah blah, etc - via the press. The Chairman's rebuke was short, public and swift "...although I will not seek re-election, I remain as CEO".

January to February 2019 - 2018 - Christmas had just passed and we celebrated reduced injuries, new QHSE goals, and winning more Sustainability awards (and O&G business) that I was very involved in. The 2018 roadmap became the 2019 roadmap and promoted more cost-cutting (while still allowing business-class flights for the executives - hilarious)! At this point, I left for a short medical emergency and read disturbing news and quietly approached my boss. This news soon became widespread knowledge and the Executive Board made a public announcement e.g., 'WE ARE NOT FOR SALE AND IF WE WERE WE WOULD TELL YOU - the Board!' PAN then went hunting Agility of Kuwait for a merger while competitor Kuehne + Nagel was approached and simply said in a statement "wir sind nicht interessiert".

March 2019 - The acquiring company then released their prospectus and rhetoric "the Executive management (EB) must leave now" This was ignored and the merger became a hostile takeover if we are to believe the news media. The EB simply reminded us to "stay focused on our targets - WE ARE NOT FOR SALE, it may never happen" so we did!

1st April - this date is traditionally April Fool's Day. Instead, we received an email - "CEO - Newsflash: Panalpina is now owned by DSV". You could feel the panic as meetings were hastily arranged and emails were sent out. The CEO's message was simple "focus on your targets, avoid rash decisions, completion is way off".

From my experience, M&A create low morale and we often see accidents, even people willing to experience a small pain for some gain; I dislike those who do this.

Lesson one: Companies merging or acquiring should identify indirect risks, or will end up with claims and pay-outs. If you don't know how to mitigate these risks (e.g., accident claims) speak to the people who do; just don't treat them with disdain.

It feels like Groundhog Day, Bill Murray would be proud to be here.

16th August 2019 - While holidaying in Cyprus and working on tenders, emails and phone calls came in. The acquisition company had just released a cheeky online video, and within a few hours were knocking at PAC's front door (okay, Head Office sliding glass panel but you know what I mean). Meetings were convened and a very public statement released "Panalpina staff is important, we are not looking for redundancies and want to build this company, so shhsssstttay focused on customerssss". Nothing wrong with that (we hoped).

August to December 2019 - These 3 months were tough; no decisions, no moving forward, and large-scale projects etc. Leavers started along with the Executive Board (here and here ) and staff warned - was this the start of mass redundancies, and countries/customers had to request my services now rather than automatically allowed?

Lesson two: companies must integrate faster; lethargy and indecision create worry and lead to inefficiency, accidents, and attrition. Customers lost confidence kills your business!

In December, colleagues at PAN's head office and some branches were made redundant, which was painful and publicly slated in German and Swiss papers as PANAPINA was such a strong brand name. This forced my hand so I asked for a quick decision. As I was still in demand with customers and projects they would keep me as the new entity needed to evolve their HSE culture as PAN did, a culture that took a while to build, to lead the industry and match customer needs. I/We wondered if anyone could ever match that level of effective HSE (although we still had accidents) or will they take the lazy route and ignore their legal duties?

Lesson three: People remember how they are treated long after they have left - they are either motivated on their future or motivated against yours!

I must admit, I bought into the PAN motivational culture and friendship thing - I even had shares. I was motivated to help everyone and every country that wanted to drive safety and efficiency and win business from competitors, as HSE was driven by customers, the ones who did not want freight damaged, delays or associated with fatalities or a bad company name etc. Note*, investors (like Investopedia) tell you not to invest in your company, because if that industry dies, the company or you go down you can lose it all in one go; wish I took that advice.

I now go into 2020 as a proud person, happy that I was a member of many amazing teams whom I served well and who did fantastic themselves; we were all mutually motivated for the right reasons - to prevent injury and improve efficiency, with brilliant colleagues (and a few self-interested ones ho ho ho)! Looking back, I leave with good memories and achievements but still wonder when these shenanigans began; questions still remain answered in the public forum.

1. At what point did the original 'Alpina owners' want to sell up? Was it when the new chairman arrived or was promoted? Was it when directors were moved out of the way? Was it when insufficient profit was made for that activist shareholder? Was it the actions of the volatile shareholder that prompted the sell-off? Will they then become a volatile shareholder? Answers, on the back of a fag packet, please?
2. Tactics and Ruses: Was the Agility merger valid or to raise the selling price by a billion CHF (it succeeded I think), which appears a frequent tactic by Food, Pharma, and Software companies to upset the competition or make them pay more?
3. The People and Culture: PAN encouraged an entrepreneurial attitude to risk where everyone contributed to managing these. We were motivated and experienced and through teamwork achieved extraordinary initiatives, resulting in strong profits with real-time safety. In particular, I thank colleagues in South and North America, Canada, the Caspian and Korea (Ulsan) the most where I spent lots of years; different cultures with great people.
4. Profitable endeavours: Despite the odd volatile shareholder moan - PAN was profitable. The media last year said PANs profitability was 2% compared to DSV's 7-9% - well done to them. However PAN still made CHF 6 billion in 2018 (according to their KPMG annual report, 09May19). What was it Gordon Geekp retorted again :-) .

I truly hope the new owners work their magic and bring success rather than (as former UTi staff slated) making it a race to the bottom. Customers rely on competitors to improve the supply chain and drive HSE who all have legal duties and moral issues to manage. Whether you see this as Satire or not, good or bad, do you think these lessons can improve business? Do you have ideas to share?

To my former Panalpina and Panproject Colleagues, you have grown your skills in adverse circumstances and created an amazingly profitable company, with the lowest injurious statistics, and a great entrepreneurial attitude - do not forget that. These skills are wanted in the industry, by competitors and customers as you take that skillset and business with you - remember people sell to people, not their companies. So cultivate your relationships and keep each other motivated.

I wish everyone well, employers but mainly competitors ha ha ha ha ha - sorry, that's another joke. Remember, small, steady and agile companies can win more than big bulky and choosy companies.

#panalpina #passionforsolutions #panprojects #pandomoinium #mergersandacquistions #racetothebottom #m&a

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