Dom Tidey: “Our industry has seen big changes over the past few years and one of the main trends we’ve seen has been consolidation and takeover as companies use economies of scale to remain both competitive and compliant.
We will be delving in depth into the topic in Seville in our session "Mergers and Acquisitions - for a full Seville programme click here
This year we see two of our longest standing members coming together as Clapham GmbH buys out Elisabeth Sommer Relocation (ESR) to form a truly national German DSP. I had the chance to interview Oliver Clapham and Elisabeth Sommer recently in Munich where ESR is headquartered.”
DT: How long have you both been part of the relocation industry?
ES: For me it’s been 22 years in the industry
OC: 27 years, I started doing my studies dealing with mainly data and immigration, but 24 years in Clapham Relocation which celebrates its 25th anniversary this year.
DT: Elisabeth, what was your motivation for starting ESR?
ES: I was in the service industry, in the hotel business for many years and I really like dealing with people, using my language skills and working with people from many nationalities. In 1989 I heard about the industry for the first time and thought, this could be for me! After about seven or eight years I started my own company.
DT: What are the highlights of running your own relocation business?
ES: I like the fact that I can decide on the spot what I want to do, I’m not working within a big organisation where I have to fight with an administration.
OC: Yes I agree you can do things when you choose and not when permission has been given. Also I really like being self employed. I think all of us in the industry have the helper gene and being able to run your own business means you can really get to work with that gene. I like the fact that my background is as an expat child and also the fact that Clapham is a family owned company.
DT: Elisabeth, what are some of the challenges of running your own company?
ES: The funny thing is being self employed indicates freedom to a certain extent but really it’s the other way around, I think you are not so much your own boss, but your own slave. You work work work, but I’m not complaining. The biggest challenge is definitely the people, the staff, finding the right people for your business. We are in a service industry and in Germany service industries do not pay big money. People in other industries get much much better salaries so it’s hard to attract talented people.
DT: Oliver the same question to you, what challenges do you face?
Yes it’s the same, finding the right staff. We have nearly full employment in Germany and this makes it very difficult to find the right team with the right skills. Also being self employed impacts on family life, we take fewer holidays and work seems to take first place.
DT: Oliver, why did you decide to expand your business at this particular time?
OC: I looked at trends in the industry and it was choice between becoming bigger or going down the route of providing niche services and I felt that expanding was the better way forward for the future of the business.
DT: So why did you choose to purchase a business as a way to expand?
OC: We ran some calculations on alternatives and the cost of expanding was also high so acquiring an existing, known business was a fast way to achieve cost effective growth.
DT: Elisabeth why did you decide to sell ESR at this time?
ES: I attended a couple of interesting sessions at the EuRA Conference on succession planning and it gave me the idea to think of what I was gong to do with my company. I’m 63 and I want the company to live forever, I didn’t want to close the company so I could retire. The economy here in Germany is very strong, the company is doing very well. The German economy at its core is driven by small to medium sized companies and these companies want to work with others who understand this dynamic. We work with companies based in the Munich area and Bavaria who need international people to come and work with them and they are our main clients. I also thought whether a smaller company like mine will survive the next five or ten years and getting bigger would be a secure future for the company as we would be able to offer a wider rage of services. Clapham already had the demand from their clients to cover the whole of Germany and ESR becoming part of that would be good for the future of the business.
DT: What is the rough split between your direct client work and the work ESR does for the relocation management companies?
ES: Until recently it was 95% direct work with my local clients but one of my large clients went to an RMC and so that work is now done via the supply chain and the ratio has gone down to 60/40.
DT: Oliver, what was the ratio for Clapham before the takeover?
OC: We wanted to balance that better as over recent years much more of our business has come via RMC’s, probably about 65%. Now that we’re bringing the businesses together it’s back up to 45% RMC and 55% direct clients, which is a big change.
DT: Elisabeth, what process have you used to sell your business?
ES: I happen to know a company who specialise in succession planning, like many things that happen this way, a friend of a friend.
OS: This gave us ways to look at how the process would work, having someone looking at the business from outside and we were able to ask for external expertise. We would recommend this to anyone, get external expertise during the process.
ES: It’s absolutely necessary to have that outside expertise, apart from anything it prevents disputes and keeps the process steady, even if it costs quite a lot of money. I spoke with four other companies that were interested in acquiring my company and having someone external and independent to discuss this with was really important.
DT: How was it to come together having been competitors?
ES: Even though Clapham was in the Munich market I never felt we were competitors, we were already working sometimes together. I am more the type that thinks there is space for many companies.
OC: It was a case of sharing expertise so we had experience of working together and partnering which was great to have in the build up to coming together.
DT: What challenges do you see for the future of our industry?
OC: The trends we see are companies going further with supply chain solutions, but also looking for very much client driven local solutions so we will see a growth for nationwide demands but with very local expertise. Consistent delivery across the country is very key to our clients and obviously we see a trend in tech and online services are a potential market. Flexible models are going to be key with services that can be modified fast. And of course there will be more admin to deal with.
DT: What opportunities do you see for the industry in Germany?
OC: Lots of positive things are going on, mobility is increasing. Packages may be smaller, but there are more of them so although there are risks with that, there are service delivery opportunities. Keeping flexible is absolutely key to be able to answer these requests and adapt to these trends. There is also the opportunity for the industry to grow and our company in particular.
DT: The EuRA CERC Future of mobility report said exactly that, packages would get smaller but more and more people will be mobile so in order to meet these changing demands, companies would have to scale up…
OC: Yes absolutely
ES: And the younger generation moves differently right? We need to be aware that they will just go to Ikea and buy a bed and a chair, but in regard to the German economy we are very fortunate and I have clients who I would normally only do two or three jobs a year with looking at moving far more people. It’s tough for them to recruit in the local market, they need to look to outside and that increases the needs for relocation services.
OC: This is a tremendous trend for our clients, looking for precise people to fill key roles and they have to do that outside of Germany. Recruitment is a huge challenge in Germany and they need providers to assist in this hyper competitive market. Relocation and benefits associated are a key part of the hiring process.
DT: Plans for the future… further expansion?
OC: At the moment we are still in the process of integration so not right now! We have to adapt our processes on both sides, we have to implement the EGQS standard for Munich, so lots to do. We will wait a year before really looking at where we go from here, but I see further development.
DT: Do either of you plan to retire? Do you have your succession pans in place?
ES: I guess I do! I sold the company but I haven’t stopped working but I will stay 2-3 years to support and after that… but my role has to change, more in the background, less operational more advisory.
OC: I took over most of the roles in Clapham when we implemented the plan for Ileana, my mother to step aside. One of the issues is for Elisabeth to have an advisory, idea driven role.
ES: It’s so so important in this situation for the owner to smooth this process for the clients. We visited every client together and they were very pleased at the coming together, but that also I would still be around for continuity.
DT: Thanks so much, it’s been great to talk with you and thanks for all your insights.
Oliver and Elisabeth will both be at the Seville Conference is you have any questions for them message them on the App.