mergers & acquisitions and private label services for the electronic component industry

M&A and PLP Services For The Passive Electronic Component Industry

Paumanok IMR

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Paumanok IMR 502 Ballad Creek Court Cary, NC 27519 USA (919) 468-‐0384

(919) 468-‐0386 Fax www.paumanokgroup.com Prepared by: Dennis M. Zogbi

Email: [email protected]

The Global Authority On Passive Component Markets, Technologies & Opportuni\es Since 1988

©2016 Paumanok Publica\ons, Inc. All Rights Reserved. 2

Acquisitions have shaped the global passive electronic component industry over the past 25 years. In fact, based upon Paumanok Publications, Inc. estimates, approximately $6,105 Million US dollars in cumulative capacitor related asset value has changed hands during that time period (including components and raw materials- See Figure 2), and approximately $2,250 Million US Dollars in cumulative linear and non-linear resistor assets have also changed hands during the same time period (See Figure 2).


FIGURE 1: Paumanok Par2cipated In Many of These Transac2ons; Including providing OTS Research Services; Data Room Services; and Direct and Ac2ve Involvement in both Buyer and Seller Side. ••Revenues and Asset value of peripheral components other than CAPACITORS have been excluded from this slide.


Are There PaKerns In The Timing of Acquisi2ons? A close look at the myriad of transac\ons that have taken place in the

passive component market over the past 25 years reveals some interes\ng pa_erns-‐

•Companies are more likely to want to buy target acquisi\ons during \mes of great cash infusion into the market to reduce taxable income, but the target companies are less likely to sell at such \mes because they are too distracted keeping up with orders rather than looking for a formulated and immediate exit strategy.

•Subsequently, the famines which usually follow feasts in the global passive component industry occur at the \me when targeted vendors wish to exit and when acquirers actually commit to transac\ons. The reader will note the increase in M&A ac\vity in both capacitors (Figure 1) and resistors (Figure 2) between 2000 and 2003 that supports this theory.


FIGURE 2: Acquisi2on of Resistor Companies Shape The Market: 1990 and The Present Day ••Source: Compiled From The Paumanok Archives-‐ Includes LINEAR AND NON-‐LINEAR RESISTORS. Transac\on value and revenues will differ. Revenues and Asset value of peripheral components other than RESISTORS have been excluded from valua\ons. ©2016 Paumanok Publica\ons, Inc. All Rights Reserved.

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What Results in Successful Transac\ons?

Based upon a detailed analysis of each of the acquisi\ons made in the capacitor and resistor segments over the past 25 years, we have come to the conclusion that the majority of acquisi\ons (67%) were made because they were integral part of a grand strategy of the acquirer. The grand strategy included the extension of a product porgolio to be a “one-‐stop shop” and to appear a_rac\ve to distributors; or it involved the dominance of a specific segment of the market, with emphasis upon the value-‐added and applica\on specific component segment (See Figure 3).


Paumanok M&A Services Paumanok IMR offers three basic methods for your engagement with our firm. Study selection and Advice- many times due diligence for M&A can be accomplished with off-the-shelf market research reports. A Paumanok expert will help you in this selection process that will include consultation time to discuss the prospect of active involvement. Active involvement- In this scenario, Paumanok takes an active role in creating target criteria, identifying targets, contacting targets and setting up meetings designed to move the acquisition process forward every day. Post involvement- In this scenario Paumanok works with both companies to help the acquisition proceed smoothly and that the mutual benefits are realized and maximum profitability achieved.


Paumanok Private Label Products

Through years of experience in mergers and acquisitions in electronic components and related electronic material acquisitions, Paumanok has determined that developing a broader product line through private label agreements with other manufacturers is also a profitable alternative to an acquisition. The value proposition is in understanding the additional needs of the client’s customer base and knowing through audits which overseas vendors have quality product and make a good PARTNER.


For Further Informa\on:

•  Dennis M. Zogbi •  Paumanok IMR •  [email protected] •  (919) 468-‐0384

The Global Authority On Passive Component Markets, Technologies & Opportuni\es Since 1988


mergers & acquisitions and private label services for the electronic component industry

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