In the M&A world, Gilbert Harrison has seen it all.
After a half century of striking hundreds of deals across fashion, beauty, apparel and footwear — and losing out on some big buys too — the power broker gets candid about the highs and lows of his career in his upcoming autobiography, “Deal Junkie.”
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“I wanted my children, grandchildren and great grandchildren to know what my life has been like,” said Harrison, who founded Financo in 1971 with Stephen Klein, sold it in 1985 and bought it back four years later. “I wanted [to provide] some lessons for some of the younger people growing up — what to do and what not to do.”
The book, out Jan. 25, is available now for pre-order on Amazon.
Here, in excerpts from the book, Harrison, talks about dealmaking in the shoe space, working with some of the industry’s most colorful personalities and the one that got away.
When Negotiating a Deal, What You Wear Is Key: Interco Buys Devon Apparel (1973)
“From an article in the paper, we identified that Interco, the St. Louis-based shoe company known as the International Shoe Company (which also owned Florsheim), wanted to diversify their portfolio. I called the company and flew out to meet the chairman, Dude Chambers. Dude had started as a salesman and rose to become chairman, building the company up from a value of less than a $100 million to over a billion dollars.
With a name like Dude Chambers, you can anticipate that there’s not going to be a lot of bullshitting. There wasn’t. Dude greeted me warmly but looked down at the Gucci shoes I was wearing on my size nine feet and said to me something I remember to this day: ‘Son, if you come here to sell me a Lucky Strike, do not smoke a Camel.’ I turned red. I wondered if the deal was off the table, kaput. But Dude then graciously gave me a Florsheim catalogue and had me pick out two pairs of Florsheim Shoes, which he gifted to me. I figured that if he was giving me two free pairs of shoes, it was very likely we were still in business. And we were.
The deal went through, and Devon Apparel was acquired by Interco … You better believe that whenever I went back to St. Louis or met with any of the Interco people in the years to come, I never failed to wear Florsheim shoes. To this day, when we are pitching a client and they are in the apparel or footwear industry, I try to wear one of their products and ask the associates attending with me to do the same—especially if the company is in women’s apparel. Certainly, I cannot wear a dress. But all joking aside, we lost one deal with a shoe company because my banker wore a pair of shoes from a competitor brand. That was a tough lesson I will never forget.”
Chemistry Is Everything: Selling Stuart Weitzman (2005-2010)
“Howard Platt, the former head of U.S. Shoe, told me that I should really talk to Stuart Weitzman, that he was a fantastic operator, he was getting older, and maybe it was time he should consider selling his company. So I set up a meeting and met Stuart. It turned out he had gone to school with my wife, and we had a lot of mutual friends. He ended up retaining Financo to find a home for the company. … He only wanted to sell to a strategic buyer who would allow him to keep his organization intact and continue to grow the company and give a lot of input. So, right away, that takes a lot of companies right off the table and puts me onto a very specific kind of search.
The first two companies we targeted were Coach and Burberry. The reason we chose them was that Stuart felt his expertise in the shoe business could absolutely benefit Burberry, which had done some footwear that he knew needed to be updated. Coach wasn’t in the footwear business — they were in handbags — but perhaps they were ready to expand into the footwear business. Unfortunately, neither Coach nor Burberry were interested in buying Stuart Weitzman. Burberry wanted to stay a single-branded company, owning nothing other than the one Burberry name. And Coach felt Stuart Weitzman was too small for them to buy. If they were going to do an acquisition, it was going to be a billion-dollar deal, not one for hundreds of millions. Stuart was doing so well, and he really loved his business, but naturally he was disappointed that neither company bit. We then talked to a number of other people. I called the CEO of Brown Shoe, another retail conglomerate. They were extremely interested and willing to pay a lot of money. Despite their efforts, Stuart didn’t like the chemistry, and he decided it wouldn’t be a good match.
Next, we went to speak to a few private equity firms. I convinced Stuart that a private equity firm would not only give him a lot of money but would also help him grow and develop the business into a bigger company that could then be sold. We ended up talking to John Howard, who at the time was head of Bear Stearns Merchant Banking. John and his partner, Richard Perkal, fell in love with Stuart Weitzman. We ended up structuring a deal where they bought forty-something percent and allowed Stuart to absolutely run the company. I even joined the board of the company. At the original closing dinner, Stuart presented Richard with a pair of women shoes and had him parade around the dining room at the Four Seasons. A real sight to behold! Anyway, Stuart continued to grow, but after two or three years it became obvious that Bear Stearns wanted to sell the company. And right like that, we were back at it.
We talked to a number of people like the Burberrys again, and they still weren’t interested. We ended up selling to Jones Apparel, who I knew because I had sold to them Gloria Vanderbilt Jeans, among other companies. Jones also owned 9 West, which was also in the footwear business. Jones bought 51 percent of Stuart Weitzman and let Stuart keep 49 percent. And although Jones gave him total independence, the chemistry was never quite there, and the deal didn’t work out the way it should have. Even so, a year or two later, Jones Apparel ended up buying the balance of the business — and each time Stuart made a whole lot of money. Jones was then taken over by Sycamore, and they put the Stuart Weitzman brand up for sale. I was not involved in the sale, but, if you can believe it, Coach swept in and ended up buying Stuart Weitzman. So, in the end, Coach was interested. Unfortunately, they’ve totally ruined Stuart’s company, having written off the entire investment of over $700 million. So much of it comes down to timing and to who’s running the show.”
Always Show Up: Pentland Group & The One That Got Away (2001)
“I had gotten to know the Pentland Group, the British shoe retailer who had invested somewhere around $75,000 into Reebok in the infancy of the company and became the second largest shareholder after the founder. (Talk about timing, Pentland Group eventually took out over $700 million on the company.) Stephen Rubin OBE, the chairman and CEO of Pentland, and I worked on a number of deals, including Speedo when they acquired it.
Meanwhile, we were looking at other companies that might be a good fit. Converse was on our radar. The company had gone bankrupt, but the feeling was that it had great potential. So, I went with Rubin’s CFO to attend the bankruptcy auction, and we tried to buy Converse. Unfortunately, Rubin couldn’t come with us. He would have had to fly from London to New York. Ordinarily that wouldn’t have been an issue, but he was sick with a terrible cold. Our authority to bid was limited to a certain number, and the auction was going down to the wire. Though we were right there, people began to outbid us. I tried to get Rubin on the phone in London to get permission to up our number. I called him again and again, but he wouldn’t pick up. Again, he was ill, and with the time difference, he was very likely asleep.
In the end, we only needed about $1 million more than we were authorized to spend, but without Rubin’s go-ahead, we couldn’t do it. And so, Pentland was not the next owner of Converse. It was enormously frustrating. In 2019, Converse had almost $2 billion in sales. So please, do remember the importance of showing up. And, if you absolutely cannot, in instances such as these, do make sure to deputize someone with the proper authority to make a crucial decision at the critical time.”