MiTek and its subsidiaries manufacture the machinery and components—saws, presses, and structural connectors—that builders need to turn architectural and engineering visions into reality. MiTek—now an amalgam of top companies across the multifaceted building components industry—develops automated machinery and equipment that reduces the risk of error and the need for manpower: a six-blade saw with digital readouts of blade angles; software that performs engineering analysis and provides production specifications; and lasers that project a roof truss onto the assembly table.
MiTek was built through merger by Paul Cornelsen, a Kansas farm boy whose business career began after service in World War II, when he cleaned locker rooms at a feed mill in Wichita.14 From there, he spent thirty-five years working his way up the ladder at Ralston Purina, finally running its international division and serving as chief operating officer. In 1981, when a rival won the top job running the pet food company, Cornelsen left Ralston and took charge at Moehlenpah Industries (which he renamed MiTek).
An international maker of hydraulic equipment and roof assembly products founded by Walter Moehlenpah, the company had a good reputation in a competitive field for engineering, design, and production skills, especially its Hydro-Air Engineering unit. The business struggled, however, and Cornelsen set to straighten it out. In addition to selling the company’s airplane and boat—unaffordable luxuries—and attracting new outside investors, he decentralized decision making and adopted a stock incentive program, through which Cornelsen came to share ownership with seven colleagues.15
After growing MiTek steadily through 1987, Cornelsen devised a creative merger. MiTek acquired Gang-Nail Systems, Inc., a larger archrival, and simultaneously sold half the resulting company to a British conglomerate called Bowater, later renamed Rexam plc, with MiTek’s owner-managers keeping the other half subject to a Rexam option to buy them out. Cornelsen began to lean heavily on a team of executives to drive MiTek’s acquisitions and prosperity: Eugene (“Gene”) Toombs, recruited as his number two in 1989 from an Idaho packaging company; Thomas (“Tom”) J. Manenti, who ran Gang-Nails; and Michael D. Conforti, who ran Hydro-Air Engineering.
When Cornelsen retired in 1993, Rexam exercised its right to acquire 100 percent of MiTek. A few years later, however, the conglomerate refocused on its core business of making aluminum cans.16 This decision put MiTek in limbo: it was up for sale but so profitable that Rexam held out for a high price; yet Rexam would not reinvest in the acquisitions Toombs and his team sought.17
So in 2001, Toombs, with Rexam’s approval, proposed a sale to Berkshire.18 He prepared an overnight package for Buffett. In it he put one of the company’s products along with a letter explaining the business. On receipt, Buffett did not know what he had in front of him. He called it “an unprepossessing chunk of metal whose function I could not imagine.”19 It was a three-by-five-inch connector plate, MiTek’s flagship product used to fabricate roof trusses. Once Buffett saw the importance and necessity of pieces like this to the roofing industry, Berkshire bought 90 percent of MiTek for $379 million; in a revival of the owner-manager structure Cornelsen had devised, the other 10 percent was acquired by a group of fifty-five MiTek managers, including Toombs and Manenti (Conforti had passed away in 2000).20
Since Berkshire’s acquisition, MiTek has been increasingly acquisitive—closing more than forty deals.21 Most of MiTek’s acquisitions build on strengths, as when acquiring direct competitors or complementary product lines. Called “bolt-on” acquisitions, a good example is United Steel Products (USP). This company, founded in 1954, makes structural framing and connectors. MiTek had a longstanding exclusive distribution agreement with USP through which the two successfully collaborated on numerous projects. In 1998, when USP was acquired by Gibraltar Steel Corporation, USP’s relationship with MiTek was one of Gibraltar’s motivations.22 That relationship also led to MiTek’s acquisition of USP in 2011. The combination enabled bringing all aspects of the arrangement under MiTek’s control.
In contrast to bolt-on acquisitions are those dubbed “tuck-in” acquisitions: the transaction brings a related but new business, not bolting on to anything, but not pure diversification either. For example, Benson Industries, which MiTek acquired in 2013, is the global leader in curtain wall systems for high-end buildings worldwide. An expensive alternative to conventional reinforced concrete, curtains are used in buildings intended to last for centuries. Examples of Benson projects include New York’s Freedom Tower (One World Trade Center) and United Nations building and Singapore’s Marina Bay Sands.