Tell us about Quantic Electronics? What are you building?
We have very lofty goals at Quantic. We are building the best company in the electronics industry…and that starts by creating the best company to work for and the best company to do business with. We started on our journey just over one year ago and in that time, we have acquired 11 electronics components companies consisting of approximately 800 employees in 18 locations around the globe…and we are still growing. We offer 15,000+ products as well as customized solutions, and we have businesses that have over 60 years of experience serving a broad range of markets from aerospace and defense to commercial applications.
What lead Quantic Electronics to concentrate on high frequency electronics companies and are there certain high growth applications or products you are looking to acquire?
Our portfolio continues to grow rapidly. Today we have a portfolio with truly disruptive elements, coupled with “tried and true” products that are the traditional cornerstone of RF, power, and sensing technologies. For example:
X-Microwave is a recent acquisition located in Austin, TX, and the company is shaking up the RF industry. X-Microwave offers an ability to design, prototype, and test RF devices in weeks as opposed to many months, then to turn those into production ready custom IMAs and to produce them in volume. This expedited prototyping is a game-changer in the industry and the customer adoption is validating it as such.
Wenzel Associates, also located in Austin, TX, is another example of a business that offers an industry-leading technology. Wenzel has developed world renowned, low phase noise oscillators that can withstand the harshest of environments, and the company’s oscillators are the cornerstone of leading-edge DoD and space applications that at the end of the day, allow better performance. Wenzel’s oscillators have played a significant role in landing a rover on Mars and on ship radars that enable them to have greater range and sensitivity.
Quantic has balanced these acquisitions with companies that have a legacy of 60+ years of experience serving the RF industry such as PMI, TRM Microwave and Corry Micronics. In each case, these companies possess a depth of engineering expertise to supply both tried and true standard products as well as customized solutions.
What is your strategy in picking which companies to acquire – is there a set of criteria for acquisition?
We are focused on acquiring companies that meet a number of criteria, but most important in that list is that Quantic is looking for successful, growing businesses led by strong leadership teams and internal culture, and that demonstrate a differentiated technology. Quantic operates in a unified but decentralized model. We are unified by common goals and common culture, but we maintain decentralized operations.
Quantic Electronics has been acquiring microwave companies at a blistering rate, sometimes – once a week and up to 11 companies now. Do you expect to maintain a rapid growth rate, and do you see a limit to the number of companies in the portfolio?
A core component of our growth strategy is certainly to continue to be acquisitive. We expect to remain aggressive on the acquisition front, and we’ll continue to be opportunistic when we identify a target that meets our acquisition criteria. We believe that our unified but decentralized operating model allows us to move quickly and integrate quickly.
You have acquired several capacitor companies, are they complimentary to each other or is there overlap that might result in merging of operations?
As you highlight, we have acquired three capacitor businesses to-date, each with a unique technology. The advantage we offer is that the different technologies allow us to provide the best solution to support and solve a customer’s problem. By creating a capacitor testing “center of excellence” to support all three businesses, we are taking advantage of synergies built primarily around product characterization and applications engineering. But as mentioned previously, our philosophy will be to allow the businesses to continue to operate individually, while we create an environment for collaboration at the customer and sales level.
What synergies are you realizing as a portfolio of related companies?
Our businesses are very complementary and synergistic in nature, and because of this we can leverage our full product portfolio. For example: In the defense and commercial markets — we can play across the markets taking advantage of commercial technology advances and larger production volumes and apply those benefits to defense applications; and on the flip side, we can leverage the rigors of defense standards and reliability back into the commercial market.
When you acquire a company, do they continue to operate under their current brand and operations?
We have a decentralized operating model. We allow each company to run their own business but we’ve created the opportunity to leverage a centralized, world-class sales & marketing organization. We also recognize that in the industry today, customers are begging for responsiveness, quick turn-around, and simply the ability to avoid bureaucracy. Our model allows for that while also giving the benefit of an integrated company backed by a well-funded private equity firm that can leverage intellectual and investment capital across their portfolio.
What benefits do acquired companies realize from being part of the Quantic Electronics group?
We have built a world-class sales & marketing team that smaller companies traditionally can struggle to develop. This enables us to introduce our companies to customers they may have not been able to open doors at due to their size or lack of resources. We also have access to capital that can enable quick investments in infrastructure which allows us to lean forward and co-invest with our customers, to include putting prototypes on the table rapidly.
There have been more venture capital companies doing acquisitions in the RF and microwave industry in the last couple of years, why do you think they have focused on this industry?
I believe investment companies are active in RF/MW for a couple of reasons. First off, they are attracted to growth - the “electronification” of the world continues at an ever-increasing rate and RF/MW provide fundamental technologies that are instrumental in the 5G and SATCOM rollouts. Additionally, low interest rates have resulted in “cheap money,” and even with the uncertainly of the economy, there is a recognition that defense budgets will likely remain strong, and the dependability of multi-decade programs provide stability and cash flow for debt service.
What types of companies do you expect to acquire in the future?
Great question! On the RF/MW side we are looking at advanced packaging, digital, and higher frequency/power/bandwidth. On the sensing side we are looking to offer products for high-volume markets that may not need the sophistication we offer today. And on the power side we are looking at companies to broaden the topologies that we offer today.