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Stephan Cretier: Looking for a sustainable path

Garda World Security Corp.'s seemingly insatiable appetite for acquisitions has made for a compelling growth story much loved by investors.

More than 25 takeover deals over the past seven years, 11 in 2007 alone. Dazzling top-line growth. A once-tiny local Quebec company transformed in a scant 12 years into the world's fifth-largest security firm.

But what happens when the frenzied wheeling-and-dealing stops, as it has since the $395-million agreement in February to buy Los Angeles-based cash-handling firm ATI Systems International Inc.?

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Just as nature abhors a vacuum, so does the market attempt to fill a void in the storyline.

Montreal-based Garda - a full-service security provider whose offerings include personal protection, investigations, consulting, as well as employment and airport screening - has been busy lately quelling rumours that have helped take down its stock price.

Stephan Cretier, founder, chief executive officer and largest shareholder, has been experiencing first-hand the effects of the break in his company's usually reliable growth-by-acquisition arc.

One false tale that made the rounds was that he was seriously ill. Another was that Garda was finding it tough integrating ATI and that it might breach the conditions of some of its loan agreements. That was also firmly denied.

Short sellers, investors who bet on a stock's price falling, have been tipped as the likely rumour-mongers.

Those recent events in the stock market highlight the need for rising companies like Garda to become known for more than just their ability to soar on deal-making prowess. What's taking the place of the go-for-broke mindset as Garda lays the foundations for life as a big, established corporation?


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Mr. Cretier is clearly frustrated with the hit Garda shares have been taking.

"Do we like it? No. Can we live with it? Yes, of course," he said.

There is too much short-term thinking about Garda, he said.

But the focus right now is on the integration of the many parts, especially ATI, and ensuring follow-through on issues like cost control, says the former department-store detective. And those are key to making Garda a long-term winner, he adds.

There are adaptations to be made as you grow into big-company status.

"The way we work is to be highly decentralized. Each division leader is responsible for growing his business - top and bottom line - whether it's by acquisition or by internal growth," he says.

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Mr. Cretier says part of his job is countering the widely held perception that Garda is primarily an industry consolidator.

"You can be successful doing both" - organic growth and expansion-by-acquisition - he insists.


Garda's executive team was reorganized recently to reflect the company's switch from a mergers-and-acquisition slant to more mundane matters like back-office processes and cost savings.

A new chief financial officer, Fran├žois Rodrigue, was brought in from the outside and will concentrate on putting in place systems to better manage the much larger company Garda has become over the past two years.

Outgoing CFO Alain Dumont has moved out to Los Angeles to lead a newly created team focused on the integration of ATI and ensuring that cost-cutting targets are met.

But Mr. Dumont will continue to help out Mr. Cretier on the M&A front, by way of ensuring that no compelling opportunities are missed.

Senior vice-president and chief operations officer Patrice Boily becomes senior VP of operations and re-engineering, leading the cash logistics and transport team in Canada as well as helping with the ATI fold-in.

Mr. Cretier is not a big fan of meetings. He likes his decentralized model and leaving a lot of the decision-making to the heads of his business units.

When Garda is in major integration mode - as it is now - there will be monthly meetings with the team in charge. For example, cash logistics president Richard Irvin and his team report to Mr. Cretier on the progress being made integrating ATI.


Mr. Cretier has turned to positioning Garda for sustainable long-term growth.

Management meetings now devote more time to items like how to get the diverse businesses working together in more harmonious fashion, and how to develop new markets from existing lines.

Executives have been instructed to be on the lookout for cross-selling opportunities across business segments.

For example, Garda pitched one of its cash-logistics customers - a big international bank - on its money-laundering investigative operations in Latin America and won a contract.

For all that, Mr. Cretier still has work to do to convince skeptical shareholders he can deliver a unified company that is producing the promised synergies from the combination of so many different firms operating in a such wide spectrum of security services.

Even he admits it is somewhat "utopian" to expect that all the parts will end up working perfectly in unison.

But he's in it for the long run.

"This is not a short-term play. I'm not a hired gun. I own 25 per cent of the business," he said.

"My job is like a general manager of a hockey team. I'm trying to put the best players on the ice."

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