I still remember the terror when I lost my job. It wasn’t such a tragedy – the company was a burger shack on a Connecticut beach closing for the winter, and none of the short-order cooks had much of a future for the next nine months. But I was 18 and had no idea there was life after grease burns and minimum wage.
Still, the turmoil of job uncertainty is never pleasant. For IROs, just as for every other profession (burger flippers included), job security is a serious issue – you want to make sure you have it. And if you’re going to leave, you want to do it on your own terms.
Thankfully, no public company is going to eliminate the IR function. But there is one major outside force that can make an IRO’s position suddenly precarious: M&A. And with mergers and acquisitions on the rise, the specter of uncertainty is becoming a reality for more and more practitioners.
A time of uncertainty
One of the frustrating aspects of M&A is the lag time between an announced deal and its completion. And in a cruel irony of sorts, IROs are often deeply involved in the process, working toward a deal that might mean the end of their tenure.
For Gaston Kent, VP of IR at Northrop Grumman, the situation was even more tenuous. In the late 1990s, the Los Angeles-based defense contractor was being acquired by Lockheed Martin. The downside: ostensibly the loss of Kent’s job once he’d helped finalize the acquisition. And then the deal fell apart. ‘I sat here for over a year waiting and knowing I was going to have to leave. It wasn’t pleasant. But my company was smart enough to put incentives in place while we were waiting, making it financially unwise to leave. So when the deal fell apart, we had a corporate office in place.’
Wolfgang Schnorr, deputy head of IR at Deutsche Bank, sees the waiting game a bit differently, though the view from the other side – the buyer’s – is a bit different. In November 1998 the German banking concern announced its planned acquisition of BT Alex Brown. It would be six months before the acquisition closed, but Schnorr says that the time lag worked to the company’s advantage.
‘It gave us time to prepare and make the right decisions. We were looking at Bankers Trust’s IR team from the day the acquisition was announced so that we would be able to act quickly and correctly. When the deal closed in June 1999, we were ready. The key people we wanted knew very soon that they would have a future with us. But if you don’t have time to review the situation and have to act immediately, then the transition process doesn’t run smoothly.’
Culture shock
Finalizing post-merger plans is only half the battle, however. Once a merger is completed, the integration of the surviving IR personnel begins. Corporate cultures often differ, and the process can be painful, especially when it follows a cross-border deal.
One of the more recent and frequently cited cases of cultural clashes run amok was the 1998 merger of Daimler-Benz and Chrysler. But according to Rocki Rockingham, the international corporate media relations contact at Chrysler at the time, the cultural clashes are surmountable, and the synergies tend to outweigh the cons.
‘There were distinctive differences, from a personal and business perspective. In Germany, for example, one person often has one task that they focus on, whereas in the US you might have 15. From a communications standpoint, things are very different between the US and Europe, and that’s true for IR as well. But that means you need expertise from both sides, so not only didn’t we lose people, but we had to add people,’ says Rockingham, who has since taken over the communications job at Sunbeam Corp.
‘The different cultures are definitely an issue you can’t avoid. But I believe that it can be a positive factor,’ agrees Schnorr. ‘You have to be open and flexible. You must be willing to change your attitude, and if you can then it broadens your perspective. I learn from our American colleague, and I think he learns from us.’
Silver lining
Schnorr and Rockingham kept their jobs, but Doug Wilburne, now VP of IR at Textron in Rhode Island, wasn’t so lucky. And as he says, the writing was on the wall from the start – twice.
Wilburne had been at Bell Atlantic for 20 years when it merged with Nynex in 1998. ‘I was one of the three directors of IR. It quickly became apparent that they wouldn’t need two executive directors of investor relations, let alone six.’
Making his decision to leave easier was the fact that he didn’t want to move from Philadelphia to New York. A number of interesting calls from headhunters didn’t hurt either. One of those calls led to a position as head of IR at AMP Inc. But as fate would have it, he was soon thrown into uncertainty again, when AMP became the subject of a hostile bid from AlliedSignal. In the end, the company was rescued by a white knight, Tyco International, and Wilburne was faced with yet another decision.
‘After that deal with Tyco, I had to make a decision: did I want to stay on doing strategic planning, which was offered, or did I want to leave? As serendipity would have it, Rite Aid Corp, like AMP located in Harrisburg, had warned it would miss earnings by 20 – 22 cents, and the stock lost about 40 percent. They contacted me, knowing they needed help since they’d never had a formal IR program. I felt the worst was behind them, so I went. I wanted to stay in investor relations, and it was a great opportunity to move up the ladder and have a larger role,’ says Wilburne.
While both Wilburne’s experiences resulted in his leaving – though he wasn’t forced – in the end he benefited. ‘Once a deal is announced, it creates risk and opportunity depending on your situation. If you’re extremely happy, it creates risk. If you’re the number two person, which I was at Bell Atlantic, it creates opportunity. I was perfectly happy at AMP, and would rather have stayed. But when I got the calls from headhunters, it opened my eyes and accelerated my opportunities. You can also end up making more money when you switch jobs. So while you leave some things on the table, you can possibly pick up more on the receiving end.’
Answering to shareholders
What kept Wilburne focused during the months leading to the completion of both the mergers he was involved with – when his future remained unclear – was a single commitment: to the shareholder. ‘In both cases, I was not engaged in any career activity until after the announcements had been made. There’s a matter of loyalty and ethics, and it would have been premature for me to pursue options. And then, as a matter of practicality, when you’re involved with the early stages of planning, you don’t have time.’
‘You do what’s best for the shareholders and you do what you can to add value,’ agrees Joseph Cantie, who was in London working at Lucas Industries when US-based Varity acquired the company. ‘In my case, I just said once the goal is accomplished, the powers that be are going to either see value in what I do, or I have to get the resume out.’
In Cantie’s case, it turns out he added plenty of value. He’s now VP of IR at Ohio-based TRW, the company that acquired LucasVarity in 1999. ‘My fiduciary duty is to the shareholders as well as the CEO. There needs to be a balance between the two.’
Not that you shouldn’t keep an eye out for yourself, however. As Kent notes, ‘Know the headhunters beforehand and make them a part of your networking checklist; know your peers; join professional organizations like Niri; and don’t panic.’
