I think the next few years are going to be the time when small companies will fall prey to bigger and richer hunters in the supply chain world. The current economic conditions are testing each and every logistics or freight forwarder in the business. The companies who have a stronger P&L and adoptability to the market condition will survive , while others will fall prey to the bigger and stronger.
There is no text book written or there is no single concept which is proven as the best practise for Merger and Acquisition (M&A) in our logistics and supply chain industry . But it's a much debated topic among many experienced companies who have done many M&As . Through out my career , I have seen many M&As , big and small. Some of them have been a great buy and others were left to a name board only . I cannot find any reason to disagree with the methods that were applied to do these M&As ,but the results have been negative and positive .
If we really think about a M&A , we need to ask ourselves , why a company wants to sell and why another company wants to buy . In most cases , I have seen that these two questions are not understood by both parties in a M&A . if we try to spend time to understand the seller's intentions and buyer's intentions , it will open a path for a smooth merger . The positive M&As that I have seen have always had this question answered and I also saw both parties working towards the same goal .
In my personal opinion , buying a company is not a very difficult situation . if you have the right people who understand the business , doing the due diligence and if you have the sharpest financial team analysing the results , then it is not too difficult to agree on an enterprise value and discuss the prices . But I think the difficult part is merging the two organisations and achieving the objectives .
When we talk about M&A , on the one hand we have seen some companies who were bought ,being left alone to do their business . On the other hand , some companies which were bought , and were merged immediately .
I personally think , the 'whether to merge or leave alone' strategy comes with the understanding of the first question . The intentions of the buyer and seller . In most cases the upper hand is with the company who buys another . There are two principles that every buyer should think about . Are you buying a company to expand your footprint ? if the answer is yes , then merge the company immediately, even if you have to go through a restructuring process ,and even if that's painful to the company and its employees . Delaying this will lose good people and business .
Are you buying a company to benefit from the business of the seller's company ? if the answer is yes , then give them the needed financial support and network support but leave them to do their business . Do not try to merge them as that was not your intention .
In summary , it's all about how much do you understand the buyer's intentions and seller's intentions .
We have seen billions of dollars lost during so many mergers and acquisitions in the past 10 years which we can name them . I have personally experienced M&A on the buyer's side and seller's side where I have seen both scenarios of final result .
