Gilbert W. Harrison Dishes on Being a ‘Deal Junkie’

·8 min read

There’s much about Gilbert W. Harrison and his career that looms large.

Fifty-plus years in investment banking. Hundreds of deals consummated. A colorful reputation far exceeding the size of Financo Inc., the boutique banking firm he founded. A Rolodex with about 10,000 names. An assertive, persistent, sometimes off-putting manner. The rumbling voice. The bushy eyebrows.

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“There’s no question about it. A lot of business I did could only have succeeded because I was aggressive. On the other hand, it pissed some people off and I lost business because of it,” Harrison told WWD. “You keep calling them up. You keep pushing a deal. You think the deal should be done and it’s not. They’re not paying attention to it. My biggest frustration was when I knew a deal made sense and you couldn’t get the other side to see it. However, on the whole, it was more positive than negative.”

Harrison is at his Fifth Avenue office, discussing his upcoming autobiography, “Deal Junkie” (Post Hill Press), which will be published Jan. 25 and can be preordered on Amazon.

The pages on deals negotiated, never consummated and kept confidential are as telling, if not more so, than deals that did work out. Like when Martha Stewart tried to buy Kmart, or when Gap Inc. and Investcorp at different times considered buying Crate & Barrel.

Harrison was in on efforts by Iceland’s Baugur Group to buy Saks Fifth Avenue, which didn’t happen. He often advised Leslie H. Wexner and tried to get him to buy The Body Shop. “It would have allowed him to go global and use as a base for Bath & Body Works. L’Oréal paid twice what Wexner would have had to pay. Eventually, he bought La Senza, which was global. “The big thing that went wrong was not consolidating it with Victoria’s Secret. They never got the efficiencies and synergies.

“We always talked to Macy’s about different acquisitions and [then chief financial officer] Ron Tysoe said, ‘If you want to do something, try to buy Kohl’s for us,” Harrison recalled in the interview. “I also talked to Rob Walton, chairman of Walmart, about Kohl’s and he liked the idea but they were doing big-box stores and couldn’t handle both. The idea was to put Kohl’s at one end of the strip center, Walmart at the other.”

Federated Department Stores decades ago targeted Walmart for acquisition, Harrison said. He believes if Federated followed through, it never would have gone bankrupt and gotten swallowed up by Macy’s. It’s also possible Walmart would never have become the world’s largest retailer.

At a lunch with Howard Goldfeder, the former chairman of Federated, “Howard told me one of the things he regretted is that he didn’t buy Walmart when he had the opportunity. When you look at many of the opportunities department stores had to diversify their basic business, they just didn’t do it. Many times the chief executive officer had the insight, but those reporting to him killed a deal because they thought they would lose their jobs or their power. You see it today in many situations.

“The other thing is, they think all investment bankers want to do is push for a deal, for a fee. I love fees — don’t misunderstand me. But over the years, more often I probably told people not to do things than to do things. When people look at the fees that investment bankers get, they think it’s so high. But how many deals do bankers work on that fail, where they don’t get anything. Compare that to the lawyer who gets paid regardless of what happens.

“The thing is, I love deals. I love everything about them — the game, the interactions with people, the chase, the kill. I always have.”

In his autobiography, Harrison acknowledges some mistakes and regrets, and also chronicles his upper-middle-class family life, growing up in New Haven, Conn.

Gilbert Harrison at his Wharton School graduation with his parents.
Gilbert Harrison at his Wharton School graduation with his parents.

After law school and working as a lawyer for a time, he founded Financo in 1971 in Philadelphia with Stephen Klein. “We were like a couple of young thoroughbreds flying out of the gates and around the bends in the ’70s and early ’80s. We had so much enthusiasm,” Harrison writes.

In 1985, Harrison sold Financo to Shearson Lehman/American Express, a mistake in retrospect. “The infighting, envy and divisions within the company’s structure meant you were working not as a team but against the people in your own office,” Harrison writes.

Four years later, Harrison bought back Financo. It was a lesson well learned. “Protect as you would your own life, the source that keeps you excited waking up each and every day to tackle the next opportunity,” Harrison writes.

Of all his deals, Harrison is most proud of the TJX Cos. Inc. merger with Marshalls in 1995.

“Brilliantly, TJX combined the back-of-the-house, the merchant team, financial and IT of these two stores into what became Marmaxx. The result of that decision was colossal. TJX’s net income at the time of the closing was $83 million. Two years later, it grew to $365 million. The market capitalization went from $1.1 billion in 1995 to $3 billion the next year. Today, the company has revenue of $40.6 billion, an EBITDA [earnings before interest, taxes, depreciation and amortization] of $5.1 billion, and a market capitation of $75.4 billion with another $10 billion in cash for an enterprise value of $84.8 billion.”

Ironically, he got his biggest fee on a deal that he lost. He represented Jos. A. Bank’s efforts to take over Men’s Warehouse, which ultimately took over Jos. A. Bank in 2014, forming Tailored Brands Inc. Debt, the internet, casualization and the pandemic pushed Tailored Brands in and out of bankruptcy in 2020, and still struggling.

“The thing that upset me the most, besides losing, was we put together an entire business plan on how to merge the two companies together, to make it successful, and the management of Men’s Warehouse didn’t even want to see the plan,” Harrison said. “Look where it ended up.”

Harrison said on average, ten deals were completed each year, though about nine of ten deals negotiated never went through.

Harrison’s Financo dinners in January each year elevated the firm’s reputation. They drew a “who’s who” roster of industry figures ranging from Sean Love Combs (formerly Sean John Combs), to Millard “Mickey” Drexler, David Simon and Don Fisher, and featured feisty panel discussions, and hushed M&A dinner-table conversations, both instigated by Harrison.

“We would sit two CEOs together and make sure one of our bankers would sit with them, sometimes in between them,” Harrison recalled. “The mistake I made was when I invited some private equity people and they would do deals and I wasn’t involved. Or sometimes two people sat next to each other and they would discuss a deal and I wasn’t involved. On balance, I came out ahead.”

Among his favorite retailers: Jerry Schottenstein. “What impressed me about him, you could shake his hand and he would honor an agreement.”

And Marvin Traub, who was chairman and CEO of Bloomingdale’s, and subsequently founded MTA originally as part of Financo until going independent 10 years later. When Bloomingdale’s parent Federated wanted to replace Traub, he decided to lead an acquisition of B. Altman, an upscale department store no longer in business. The ploy, said Harrison, enabled Traub to get another five years running Bloomingdale’s because Federated feared having Traub as a competitor running Altman’s.

On John Berg, the seasoned merger and acquisition, corporate finance and private equity banker, Harrison brought to Financo in 2012 as a partner and CEO: “I probably should never have made John the CEO,” said Harrison, acknowledging that the arrangement didn’t go smoothly. “On the other hand, because of some things that happened in my business, I had to develop a succession plan. I had to bring in additional capital. Business was a little bit difficult. We were going through a recession and there were differences of opinion. But I truly wanted Financo to remain after I had gone.”

In December 2017, Harrison left Financo. Three years later, Financo was sold to the Raymond James firm.

Harrison, who turns 81 on this Christmas Day, is a one-man show at Harrison Group, using other bankers and consulting firms to assist in transactions, and his longtime executive assistant Amylou Sarion. He is a senior adviser at GLC Advisors, working on one deal in particular he says “could be my last hurrah or perhaps even the crown jewel of my career, although at present, both the Marshalls/TJMaxx deal and the Jos. A. Bank deal would fit that description.”

He’s on the boards of InterParfums, and the Peggy Guggenheim Museum, consults to Alo Yoga on overseas growth, is chairman of advisory council of Eshop World, and is senior adviser to Xcel Brands, and supports the UJA.

It took him six months to write his autobiography. He would get up at 3 a.m. and write at his computer for a couple of hours.

“I did it for my family, for my grandchildren and great grandchildren to read, and for people in the business,” said Harrison. “I thought some of the insights are very important for future bankers and businesspeople to understand. It was great fun reflecting on a lot of things that have happened in my life. But I keep thinking of things that I didn’t write about.”

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