George Zimmer: My Biggest Mistake

 

GEORGE ZIMMER
Founder and CEO of the Men's Wearhouse, a $1.2-billion retailer of men's apparel based in Houston

It has been said that "pride goeth before a fall." In my case, it went before a failed negotiation. Four or five years ago, I started talking to Martin Prosserman, the founder of a chain called Moores the Suit People, which seemed like a great acquisition for us. With more than 100 stores, it was the largest retailer of men's tailored clothing in Canada. It also had a profitable factory in Montreal, which would have offered us the opportunity to become vertically integrated. Moores looked like a great fit.

Even though we were negotiating in good faith, the talks quickly changed from making a deal to butting egos. I had the hubris to think that offering Prosserman $100 million would make it impossible for him to walk away, especially because he had all his net worth concentrated in one business. I just felt that I had the upper hand and that he would accept the offer because of its size. When he was reluctant, I figured that he was just holding out for a higher price. I didn't believe that he was serious until the very end. And then he very courageously declined our offer.

We put our plans for Canada on the back burner. But when the time came to analyze the Canadian market again, our research only confirmed what we'd known four or five years before: Moores was the best-run business in that market, and we didn't want to compete against it. And a little more than a year ago, our president, Dave Edwab, came to me and strongly suggested that we buy Moores. And we did -- for about $25 million more than what we would have paid if we had bought it three years earlier.

I learned that you have to look at an acquisition strictly in terms of what it means to your company -- and not in terms of whether the other fellow is getting a good deal. The first time around, I got confused between the incredible opportunity the deal presented us with and what I thought was a holdout play on Prosserman's part. I had to learn to separate myself from the financial transaction and to realize that the ultimate price tag on a deal is not a reflection of my worth as a human being. --Written with Ilan Mochari