Adaptive Materials acquired by UK-based Ultra Electronics

Wednesday, January 12, 2011 | Source: Concentrate
All new businesses strive to make the leap from start-up to second-stage company. However, the real challenge is moving from second-stage to established firm, a jump Adaptive Materials recently made and its founders have an opinion or two about.

The Ann Arbor-based company made that leap last week when Ultra Electronics, a global firm traded on the London Stock Exchange, acquired it. Ultra Electronics' 4,020 employees will allow the newly blended company, Ultra-AMI, to sell its fuel cells world wide, a task it couldn't do with only 60 employees.

"For fuel cells to be successful they need to be deployed in several different markets simultaneously," says Aaron Crumm, who co-founded Adaptive Materials with his wife Michelle Crumm. So although growing a company to 60 people is a number to be proud of, it's not enough to reach their window of opportunity in the market organically. Since IPOs have been basically non-existent since the financial meltdown, acquisition was the only growth path for establishing Adaptive Materials as a significant business player in Metro Detroit.

Nonetheless, acquisition has become a loaded term, often inspiring workers in Michigan to duck when they hear it. But the Crumms, now executives with Ultra Electronics, are convinced this acquisition will be more HealthMedia than HandyLab, staying local and growing their presence. Ultra-AMI has 11 open positions and plans to continue growing in Ann Arbor for the foreseeable future.

"We carefully choose our acquisition company to be the right-sized company," Aaron Crumm says. "They're big, but not too big. They operate globally with 24 business units. We're No. 25, but they're not too big that they can't have another business unit."

He adds that acquired companies are likelier to stay put if their products are more innovative. If it's a start-up in a mature industry, then it makes more sense for the bigger company to eliminate the corporate staff to streamline the new combined operations. However, if it's in an emerging sector than it's not as easily assimilated into bigger operations. Those companies are often left to grow and continue to create jobs locally.

"That's ultimately the true measure of success locally, at least in my opinion," Aaron Crumm says.

Source: Aaron Crumm, co-founder of Adaptive Materials
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
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Investment, Renewable Energy, University Of Michigan 

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