TTI has announced its intent to acquire RFMW, a privately held, specialty distributor headquartered in Silicon Valley, California. As part of the agreed acquisition, RFMW will continue to operate under the RFMW brand name, reporting through the TTI Semiconductor Group (TSG). The transaction is expected to close October 1, 2018. No valuation for the deal was announced.
RFMW brings a strong lineup of leading RF and microwave component manufacturers to the TTI Semiconductor Group (TSG) group that is being built up within TTI. Key semiconductor manufacturers represented by RFMW include: NXP, ParkerVision, Qorvo, RFMD, Triquint, Skyworks and MACOM (Metelics). Their product portfolio in semiconductors covers: transistors, amplifiers, RF modules & ICs, control components and diodes. In addition, RFMW supports a strong portfolio of passive and electromechanical devices for RF and microwave applications. Altogether, they represent a strong fit for the TSG strategy of acquiring distributors with non-overlapping product portfolios.
The first two acquisitions completed by TTI to form TSG were Symmetry Electronics, headquartered in Southern California, and Changnam in South Korea. Symmetry specializes in the wireless, cellular and video side of semiconductors, and the expanding world of IoT. Changnam is a strong local semiconductor distributor with a prime focus on the automotive market, and a secondary focus on cellular, industrial and consumer electronics markets.
Mouser Electronics, another TTI company, provides an important supporting role for members of the TSG group as it specializes in providing the newest products and supporting materials to the world’s electronics engineering community. Given their stated strategy of building this group through acquisition, it is anticipated that future acquisitions will be made as TTI builds on the strong capital backing of parent company, Berkshire Hathaway, to create a strong presence as a leading distributor in the semiconductor supply chain.
TSG is mirroring the approach of its owner, Berkshire Hathaway, in how it manages its acquisition. The group description states that each company will operate predominantly standalone, maintaining its own identity, customer and supplier relationships, and financial statements. If there are areas of overlapping markets or products solutions will be implemented to eliminate internal competition and build on mutual strengths. The primary contributions of TSG will be to add capital to fuel growth and facilitate joint marketing initiatives undertaken to maximize the overall value that the TSG companies brings to their customers and suppliers.
The TSG approach to acquisitions is distinct from the typical model most companies follow as they integrate acquired companies. In a standard acquisition, cost cutting benefits are pursued immediately as redundant resources are eliminated, product portfolios rationalized, and supply chains consolidated. In the pursuit of a unified brand and market message the acquired company sees its unique positioning eliminated.
Typically, key talent and leadership depart shortly after an acquisition due to a variety of reasons which leaves more junior employees and others less familiar with the key success factors of the acquired company to try to move forward. There are clear trade-offs in the standard model of integrating acquisitions.
In its acquisitions, TSG has noted its strong support of the leadership and team members of the acquired company. It appears to take a purposeful approach to enhancing rather than replacing the unique elements that have created the company’s success. Given that management talent and customer relationships are critical in a distribution business, this is a very wise approach.
Michael Knight, TSG president, is a seasoned veteran of the distribution business having served as Electronics Components Industry Association (ECIA) chairman previously and contributed thought leadership on the electronics supply chain in many forums. The TSG philosophy guided by experienced leadership points to a bright future for TTI’s investments in the semiconductor distribution arena.