It is now common for businesses big and small to have acquisitions as a component of their plans for growth. TTI is no exception, though it has only been since 2000 that the company did its first acquisition, and 2008 since acquisitions became a deliberate part of any growth plans.
TTI was founded in 1971 and for its first thirty years of life, grew strictly organically. Even when the company expanded internationally, it did so by green-fielding start-up operations in other countries; exporting the TTI culture, business model and systems into those operations, rather than acquiring existing, in-region distributors and then trying to integrate and adapt them. This was contrary to the approach taken by a number of other established competitors who were actively pursuing a roll-up strategy, which significantly consolidated the electronic component distribution landscape eliminating early pioneers and marques like Hamilton, Schweber, Marshall, Richey and Kent Electronics.
TTI’s objective wasn’t to be the biggest, it was to be the best, and the company felt that getting involved in the acquisition game back then would distract it from its intense focus on refining and perfecting its business model to become the best distributor of interconnect, passive and electromechanical components (IP&E) on the planet. The belief was that growth would follow, and it certainly did.
Coming into the 21st century, the company was established enough to participate in an acquisition without risk to the core business, provided that acquisition was incremental and compatible to the IP&E business that is TTI’s focus, and that the culture of the acquired business was compatible with the unique culture of TTI that customers and suppliers alike had come to appreciate and value. Compatible meant, and still means, that the acquired business did one or more of three things: 1) extended TTI’s operations into regions or territories in which it has no (or very small) existing presence and operations; 2) gets TTI involved in end market segments in which it has little to no existing presence or market share; 3) adds suppliers to the line card that are synergistic to the current suppliers, and that because of an already full distributor roster are not open to adding TTI to their channel.
In 2000, TTI made its first acquisition, Mouser Electronics in nearby Mansfield, Texas. At the time, TTI was in the process of green-fielding its own catalog operations in answer to the strong growth that stand alone electronic component catalog distributors were having. The acquisition of Mouser was a way to fast track that effort. Mouser delivered on two of the three criteria-expanded markets and product lines – day one, and with investment by TTI into their business, soon was also extending TTI’s geographic reach.
With this acquisition, TTI also demonstrated that it was a different kind of acquirer than its publically traded competitors. Rather than buy and roll-in, TTI left Mouser stand alone seeing that as the best method for Mouser to realize its full potential, a model that is still in place today, and that has been proven successful by the fact that Mouser was, and remains, the fastest growing major component distributor in the business. Since becoming part of TTI in 2000, Mouser has achieved a compound annual growth rate of 25%.
In 2004, TTI acquired Capsco, a specialty passive distributor in Northern California that brought a couple of new lines to the company, and some really good people to help the company achieve the kind of market share that was the norm in other markets. This was followed in 2008 by the acquisition of NTI, a specialty U.S. distributor of automotive connectors that was the key to unlocking access to the commercial vehicle market segment, a place that TTI had no prior presence. That same year, TTI in Europe acquired Mateleco, the leading connector distributor in France, which took us from having insignificant market share in the country to being number one in our space. Flightspares, a UK based distributor focused on the rail and mass transit market, followed in 2010, and that same year, the acquisition of Net-Aye in Israel gave TTI a physical presence in that geography. All of these acquisitions were slowly integrated into TTI, and today a significant number of the original people are still with the company.
2012 was a very busy year for TTI, starting with the largest acquisition that the company had made before or since, Sager Electronics. Like TTI, Sager was a long established specialty distributor focused on IP&E, though unlike TTI, Sager has a growing power supply line of business as well. There was very little customer base overlap, and the growth focus at Sager (electromechanical and power supplies) complimented rather than overlapped TTI. Today, Sager remains a stand alone entity, like Mouser, run by the original management team, and this year TTI has helped them acquire Power Gate, a specialty power supply distributor, to accelerate their growth using the same acquisition principals as TTI. After Sager came NPCS Autotronics in China to help expand the commercial vehicle segment business there, and Campbell Collins, based in England, specializing in power supplies.
One year ago, TTI acquired Ray-Q in Israel to complement its earlier Net-Aye acquisition, and to firmly establish the company as a leader in IP&E distribution in that region of the world. This year two acquisitions have been completed: Astrex in New York, and Huantong in China. Astrex helps TTI further strengthen its presence in defense and aerospace electronics, which are heavily related by the types of high reliability components that they use, and for which TTI and Astrex combined have the gold standard line card. Huantong, a specialty connector distributor, brings TTI access to the cellular phone business in China, which is the company’s first deliberate foray into the consumer electronics market segment, and brings with it an excellent connector sales engineering team to help TTI accelerate its ambition to become the leading interconnect distributor in China.
While organic growth remains the primary focus for go-forward business growth, acquisitions have certainly contributed to TTI’s continued success. In fact, of the +$3 billion in sales that the company will experience this year, a third of it is courtesy of acquisitions made since 2000, which themselves have grown at or ahead of TTI organic rates. All of this fits well with the TTI’s parent company, Berkshire Hathaway, who is well known for making great acquisitions of their own, and for retaining and super charging the management teams that come with those businesses.
Reprinted with permission from Electronics Sourcing North America