Avnet Tries Buying Its Way to the Top - ' Relying on Mergers for '

Acquisitions are part of Avnet's DNA. Founded as a radio-parts distributor by Charles Avnet in 1921, the company was taken public by his sons in 1959. Avnet began its modern growth phase in 1991, with the purchase of British semiconductor distributor Access Group, and since then it has acquired 42 more companies. Today, about 60 percent of the business is in semiconductors and other components, with the rest in computer distribution.

Avnet's acquisition planning begins long before it breaks out the Cookbook, which fits into a larger strategic plan for buying and integrating companies.

"Our integration model ensures that we fully leverage the additional experience and knowledge of acquired companies for the benefit of Avnet, as well as its suppliers and customers," Phillips said.

He described that model as "best people, best practice." It means Avnet doesn't just pursue companies to add market share, but brings on talent and processes from acquired companies when it sees an advantage in doing so.

Phillips himself shows the model in action: The former CIO of Memec, he joined Avnet this summer as part of the deal, replacing Kamins, to whom he now reports.

Kamins said, "It's not assumed that we'll buy a company but we'll keep our people and do everything our way. We have found in many cases that there are aspects of the acquired company that we adopt and make our standard. There are people who are expert leaders that we don't want to lose, so we adjust our organizational structure accordingly so we can keep them."

In the past, hanging on to talent has been tough for Western companies in Asia, said Deutsche Bank's Shoop. "The big problem when you do acquisitions is retaining personnel, and after Avnet acquired Sunrise, a lot of the core staff left. Both Arrow and Avnet have gotten burned on acquisitions that way."

So the company has made an effort to improve its retention rate. "Avnet doesn't just say, 'Our guys are the best.' They have a real discussion of who is best for the combined team," Phillips said. People in North America knew their status as part of the combined company within a week of announcement of the Memec deal, and special incentive bonuses were offered to convince key employees, including members of the transition team, to stay.

Story Guide:
Avnet Tries Buying Its Way to the Top

Competitive Difference: How Avnet's Competition Does Mergers, or Not

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