discoverIE, an acquisitive electronics company based in England, continues to grow its Magnetics & Controls Division with three deals in its past fiscal year. Through organic growth of its existing businesses and an active acquisition strategy, the division has reached a level of about $340 million annual revenues with operations globally. Strategically focusing on “design wins” and expanding its merger and acquisition team have contributed to the momentum.
The three recent deals include:
- Specialty transformer manufacturer Shape in the U.S. which will join the firm’s Noratel magnetics cluster in North America;
- Silvertel, a UK-based power-over-Ethernet modules business; and
- Diamond Technologies (DTI), an American custom embedded modules business to be part of the Beacon embedded modules cluster.
The M&C division designs, manufactures and supplies highly differentiated magnetic and power components, embedded computing and interface controls, for industrial applications. There are two clusters and three further businesses operating across 17 countries. Products are manufactured at the division’s approximately 20 manufacturing facilities with the principal sites being in China, India, Mexico, USA, Poland, Sri Lanka, Thailand and the UK.
Shape came into the fold in January 2024. Located in Addison, Illinois, the firm manufactures specialty transformers such as electronically controlled ferroresonant and constant voltage types, UV ballasts, automotive and inductor transformers.
Shape has long specialized in electronic controlled transformers that regulate the output current to assure constant power, widely used for UV curing and water purification where they help maximize the critical UV spectrum of the lamp’s output while at the same time extending lamp life. Another specialty are ferroresonant-based constant current regulators for airport runway and approach lighting applications. They are robust, single core magnetics that are extremely reliable and suitable for application in the mission-critical task of landing aircraft.
Constant voltage ferroresonant transformers from Shape provide relatively constant output voltage with less distortion using a wide range of input voltages. Shape provides Constant Voltage Normal transformers that produce a square wave output, and Constant Voltage Sinusoidal transformers that produce a sinewave output. They are commonly used for power supplies, battery chargers, lighting and inverters to help control brownouts, voltage sags, noise and distortion, and power surges.
Noratel & Flux A/S of Denmark are key parts of the M&C Division
Noratel, headquartered in Hokksund, Norway, and Flux A/S in Denmark are key companies in the M&C Division. One of Europe’s leading manufacturers of customized transformers and wound components, Noratel also has significant operations in North America where it recently re-branded toroidal power product company Plitron Manufacturing to become Noratel Canada. Noratel employs about 2,500 people and supplies industrial manufacturers across Europe, North America, India and China.
Flux A/S of Denmark designs and manufactures highly-engineered custom inductive components such as chokes, transformers and inductors. Established in 1980, Flux is based in Asnaes. HiRel production and European Space Agency-qualified manufacturing is located in Denmark while industrial & automotive manufacturing is located in Thailand. Design and engineering operations are located at both sites. There are about 50 employees in Asnaes and about 250 employees at the site in Bangkok.
Focused on growing the enterprise
Overall, the company now books revenue of about £437 million annually with the M&C division accounting for about 60% at about £265 million. “Over the past three years, the underlying profitability of the business has nearly doubled on revenues that have increased by almost 50% as the combination of organic growth with efficiencies and higher margin acquisitions came through. We made five acquisitions during the year for a consideration of £83m,” commented Nick Jefferies, Group Chief Executive, on the most recent fiscal year as he also highlighted the company’s strategy.
Strategy: Design wins driving future recurring revenues
As a business with an engineering led sales function, organic growth is achieved by identifying and winning new design opportunities and as such, project design wins are an indicator of new business creation, explained Jefferies. These are achieved by working with customers at an early stage in their project design cycle to identify opportunities. Once the products are specified into their designs, a design win is registered which leads to future recurring revenue streams. The Group has a strong bank of design wins built up over many years, creating the basis for strong organic growth through the cycle, he noted. “During the year, new design wins were registered with an estimated lifetime value of £337m, an increase of 23% over last year and with 90% being in our target markets,” said Jefferies.
Acquisitions pipeline numbers 250 possible targets
The market is highly fragmented with many opportunities to acquire, he notes. Currently, the Group’s pipeline consists of around 250 possible targets of which a number are in the active outreach phase and live deal negotiation at any time. “The businesses we acquire are typically led by entrepreneurs who wish to remain with the business for a period following acquisition,” said Jefferies. “We encourage this as it enables integration and helps retain a dynamic, decentralised and entrepreneurial culture.”
Headquartered in Guildford, located in southern England about 35 miles southwest of London, discoverIE has grown to about 4,500 employees with operations in 20 countries focused on manufacturing customized electronic components for OEMs worldwide. See www.discoverieplc.com.
