From IPO to Oh No

Money in, George out. A corporate tragedy in three acts.

Going public was the best and worst decision we ever made.

Yes, the IPO was a game-changer for Men’s Wearhouse. The cash from the first offering, and later secondary offerings (selling even more stock to the public), let us expand quickly—opening nearly a store a week for several years. We were also able to purchase Moores—think Canada’s version of MW—which also owned its own manufacturing facility in Montreal. But it wasn’t all smooth sailing. Being a public company put the company in the New York and Wall Street spotlight, which didn’t exist before.

Personal. I’ll admit it: I benefited from stock sales. No complaints about that. But the night before the IPO, when I heard from my parents that they had bought shares in the IPO, it literally kept me awake. Forget my own fortunes—what if the stock tanked and they lost $10,000?

Not long after the IPO, that nightmare scenario seemed real. The stock, priced at $13/share at the IPO, moved steadily downward. I remember this having not only a negative effect on my overall mental state, but also making me think about day-to-day business decisions based on the pall I felt.

Public. Wall Street worships at the altar of comp-store sales. Now that MW was a public company, every month we had to report monthly total sales as well as “comp” sales. (This number was the Holy Grail to Wall Street— the total sales and percentage increase or decrease of all stores open this year that were also open at the same time the previous year.) When comps were weak, so were our knees when it came time to release the numbers. It was one more added stress that we never had to worry about as a private company.

Then came quarterly and year-end reports. Stress resurfaced, as owners and prospective owners of the stock reacted to how close we came to hitting the projected earnings per share number. This was never an issue as a private company.

Very Public. A Curmudg disclaimer: This is one Men’s Wearhouse episode I did not witness firsthand. At the time, I was a contractor, writing, directing, and producing MW commercials alongside Greg Wilson from Red Ball Tiger.

Curious about Red Ball? I cover it in Ask the Right Questions.

In June of 2013, I phoned George before going to Europe for a family vacation to confirm the dates and other details of a commercial shoot scheduled for late July. George casually mentioned that he “might not” be in the commercials—issues with the board, he said. As an outside employee, I was not privy to the details, but I pressed him about cancellation costs, asked him to keep me posted, and left for Paris.

Days later, my phone exploded. Texts, emails, and phone calls—George was out.

What happened? A few years before, George had made Doug Ewert CEO, a move I thought was both surprising and smart. I knew Doug and believed he was the best person for the job. But I also think the MW Board took this as an opportunity to strengthen their power over the company and to speak out more about decisions, both large and small.

As George felt his voice fading, he pitched a bold idea: take the company private again. It could have meant a big payout for shareholders and a reset for MW. The board shot it down, arguing the debt required would be too much. George voted yes. Everyone else voted no. When he pushed back, the board pushed harder—insisting that going private “would require the company to take on a large amount of debt to pay for such a transaction.” *

Push finally came to shove, and George got shoved out of the company he had brought to life and put everything into for nearly 40 years.

But I’ll add one significant and subsequent after story:

Enter Joseph A. Bank (JOSB), our biggest competitor. Some very smart person at MW’s largest competitor was sitting on the sidelines and recognized that there must have been some turmoil at MW after George’s very public dismissal. Also, a public company, JOSB made an unsolicited bid to buy MW in October 2013. After months of back-and-forth, MW ended up buying them—for $1.8 billion.

Yes, you read that right. The same board that balked at taking on debt to go private approved $1.8 billion in debt to buy its competitor.

Because both companies were essentially in the same business space, normal due diligence—where the buyer gets to look at every detail of the company being purchased—was not done. This was perfectly legal, as JOSB cited “what if” in not permitting MW to look behind the curtain.

When the deal was finished, MW discovered that JOSB, while boasting sales nearly the same as MW's, had nowhere near the excellent management and operational structure. The first few years after the purchase found MW constantly plugging holes and spending money to fix a ragged infrastructure.

And for several years, the efforts worked. But in 2020, when COVID hit and with both stores reeling, the overall entity (Tailored Brands) filed for Chapter 11 bankruptcy.

It emerged from that in December of 2020, becoming a private company with a restructuring involving a debt-for-equity swap, which transferred ownership to its lenders and resulted in the company being delisted from the New York Stock Exchange and deregistering its common stock.

Who was “right” in this story?

I’ll let you be the judge. Shareholders got their premium in the short term. The board flexed its authority. And George, the founder whose voice once defined the brand, was shown the door. MW did become a private company again, just not the one George ever imagined.

Here’s what I know: Going public gave us money to grow. It also gave us headaches, stress, and a tragic ending.

The secret nobody tells you is this: once you’re public, you’re no longer running a company—you’re running a stock price.

* Kim, Susanna. “Pay and Power Among Reasons Men's Wearhouse Fired George Zimmer, the Company Hints.” ABC News, 25 June 2013, abcnews.go.com

TL;DR: The dark side of going public? Losing your own company.

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