Surviving Retail Mergers and Acquisitions

Security and LP professionals need to plan ahead and be ready before retail mergers and acquisitions take place.

retail mergers and acquisitions

As you read this you may be feeling pretty secure in your job, but beware—it might all change tomorrow. Retail mergers and acquisitions have been known to leave behind “a string of security executive bodies,” according to security job placement specialist Jerry Brennan.

The latest deals in the works? Walgreens is reportedly re-working its merger deal with Rite Aid to satisfy Federal Trade Commission concerns. Albertsons is rumored to be in merger talks with Sprouts. Sources say Hudson’s Bay, parent of Saks Fifth Avenue, is mulling a bid to buy Neiman Marcus, according to the Wall Street Journal.

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In addition to career development specialists, we interviewed three asset protection, security, and loss prevention directors who underwent a merger or acquisition. For each, it was not their first or second time. Between them, our forum participants have been on one end or the other of more than a dozen acquisitions. So we asked them:

  • What lessons have you learned?
  • Can you survive a merger? If so, how?
  • If not, what’s the key to landing on your feet?

Here is their advice:

Acknowledge the possibility. Could you become the professional victim of a merger? Absolutely. The three executives we interviewed—and agreed not to identify by name—have impeccable credentials and reputations and, at one time or another, have all been canned. In any industry in which mergers frequently occur—and the retail industry is certainly included on that list—a LP director, regardless of performance, skill, or expertise, should plan to one day be unexpectedly out of work.

The math is simple: a newly formed single entity rarely sees the need for twice the number of LP executives. “It’s the nature of business, and ultimately security is a staff function and the acquiring company wants to reduce the cost of acquisition as quickly as possible,” said Brennan, chief executive of SMR Group, an executive search firm for executive-level corporate security positions. “The bad news is that it’s not usually about who is best for the job or who brings the most to the table. The acquiring company typically goes with the person they’re comfortable with and who understands their corporate culture,” said Brennan. Said one panelist: “Keep in mind they can cut you loose any day, any time. And while that doesn’t usually happen, that is the way to plan, to take care of your money, to be in a position to handle it.”

Look for signs of merger activity. In each merger they’ve experienced, panelists said their position as the security leader informed them that something was up before word was out. “As corporate security, you know when people start going off-site for meetings or begin meeting with Goldman Sachs. And when they say they’re having “off-site strategy sessions” you know that’s horse $#@%.”

Another panel member, the security chief for a major manufacturer, said he went directly to his boss when he saw talks starting, about two months before the discussions became public. “I told him at the outset that I thought we could provide a better program [than the acquiring company] and that I wanted to compete.” In the end, he believes that making his intention known early paid off, and helped him win the battle for the top spot.

Read the situation. Our interviews gathered details on more than a dozen retail mergers and acquisitions and their effect on LP and security operations. It’s clear that no two mergers are exactly alike. The acquiring company holds the cards, and sometimes a security leader at the purchased firm will have a chance to influence the process, often he or she will not, and sometimes the opportunity is mere illusion. Brennan said acquiring companies often bring in consultant groups to do “unbiased evaluations” of how best to merge staffs, but that—more often than not—the fix is in.

Security and LP directors must carefully examine the situation to know when to fight and when the fight is futile. One security director told us that his company negotiated a two-year “hands off” policy under which the acquiring company would slowly examine how to merge operations. After a while, however, it became clear that he was not going to survive when the two-year clock ran out. “You start to see the hints, like offering a plan for moving forward and never hearing anything concrete back.” Within two months, he said he could tell it was smarter to start looking for new opportunities.

If you have a chance to compete, focus on details. In rare instances, the security leader at the company being acquired will have a chance to fairly compete for the top post, and one of our panelists, who won just such a fight, thinks the inclusiveness of his plan gave him the edge. “We each were asked to present a plan to an executive committee and my plan provided the cost savings they demanded but also described how we planned to enhance the security of the combined companies. The other plan was almost all about cost savings, and I think that’s what did it.”

He added: “I’ve been on the on the buying side six times and three times on the acquired side and the best chance at survival is to approach it in a professional manner and strive to prove you and your team’s worth.” Brennan agrees, and says security professionals that are most adept at handling the mergers and acquisitions process are individuals who strive to deliver value-added security and who gain recognition for these efforts by individuals across the entire organization.

But only compete if you want. A couple of our panel members recommended taking a close look at the new company to decide if you even want to remain. “The most important thing is to learn about the new culture, to understand if you can operate in it, or even be happy,” said one of our panelists. Brennan agrees, and noted that being ousted from a top security post often results in a generous benefits package that may afford an individual the opportunity to retire early or embark on something unrelated that he or she has always dreamed about. “Sometimes these things can be great opportunities. If you’re handed two-years salary and stock options, maybe you want to take that and go open an antiques shop if that’s what you’ve always wanted.”

If you stay on, deploy a road map and manage the combining of cultures. If you survive a merger, a specific plan is essential for effectively combining LP departments moving forward. “It was helpful to have a real tight plan that we could prove on a daily basis we were implementing rather than saying ‘yeah, everything’s okay; we’re on the right track’, said one panelist. “To not only believe you’re making progress, but to be able to track it on a road map is important.” He offered other critical elements for successfully merging personnel from two departments into one new unit:

  • Carefully review staff to ensure all remaining personnel have loyalties in the right place.
  • Treat both exiting and retained staff with respect and dignity.
  • Manage the assimilation of the two cultures yourself, rather than farming it out to a junior employee.

To bounce back, network now. Our panel was unanimous: Enhancing professional contacts now is the best strategy for rebounding after being squeezed out in a merger. “In terms of lessons learned, I think the single most important thing is networking,” said one security executive on our panel. “If you don’t have a network you need to develop it, and if you have one you need to keep feeding it.” He attributes some of his success to using online networking services, such as LinkedIn, that help professionals expand their business contacts. He says these are a “great tool” that gives that him a “six degrees of separation” look at connections he didn’t know he had and helps him to exploit these contacts. Finally, he says his successful networking is a result of getting off email and connecting with people in person or on the phone.

All of our panelists enhance networking opportunities via professional security or retail associations, but think actions are more important than mere membership. “You need to be on a committee or a steering group and produce a little bit. That is really what strengthens the connections that you have with people,” said one. As an active participant you strengthen ties with other active members, individuals who are likely to have very strong networks of their own that you can tap into. Said another panelist, “You have get involved, get to know people, volunteer, and help people with their issues and problems so that they are willing to assist you when you’re in a bind. You need people who know your qualities and what you’re capable of.”

Act like a job hunter before you need to hunt for a job. A LP or security director needs to take ownership of his or her career and to actively manage it, advised Brennan and our panel of merger victims. “In today’s environment, you can’t cross your fingers and hope it doesn’t happen to you. You might be lucky and last 20 years in your position but that is not a strategy,” said Brennan.

Just as LP pros develop contingency plans for their employer, they need one for their career, he said. In this vein, our panel had several recommendations:

  • Read the job openings for executive-level positions on an ongoing basis. “Not for the position itself, but for where the marketplace is going and the skills and expertise that companies are looking for,” said Brennan.
  • Stay current with business developments, retail trends, and emerging business terms and skills.
  • Subtly market yourself; for example, by writing articles for professional publications. “And not only for security publications but for business publications, because these are the individuals you truly want to connect with,” said Brennan.

Retail mergers and acquisitions have the cumulative affect of raising the bar for top LP and security executives, suggests David Lammert, president of Pinnacle Placements, an executive search firm specializing in the security profession. As companies merge, they often “start fresh” and enhance what they demand from their top LP or security executive. “[Mergers] emphasize the need to have a variety of marketable skills. This way, if you’re caught in a downsizing, you have marketable skills to offer a potential new employer—regardless of the industry. Today’s employers need problem solvers regardless of what the real job title is.”

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