Finance History | MiTek, 31 July 2001 — US$400 Million Bought 90% of a Building-Component Platform

On 31 July 2001, Berkshire Hathaway acquired a 90 percent interest in MiTek for approximately US$400 million in 2001 dollars, while existing MiTek management acquired the remaining 10 percent. MiTek produced steel connector products, design-engineering software and related services for the building-components market. The transaction therefore combined a physical manufacturing business with software and engineering tools used to design and assemble structural components. That combination could deepen customer relationships because the connector plate, the design workflow and the technical support all influenced how a component manufacturer operated. Leaving management with 10 percent ownership also preserved a direct economic interest for the people running the company after Berkshire supplied the controlling capital. Berkshire gained control without requiring every share, while managers participated in both the future earnings and the risks of the business they continued to operate. The approximately US$400 million purchase price in 2001 dollars represented capital committed to a construction-linked company whose volumes could move with housing starts, commercial building activity and customer inventories. Steel costs, plant utilization, software development and the pace of building-code or design changes could also affect margins and the value of the platform. In 2002, Berkshire grouped MiTek with Acme Brick, Benjamin Moore and Johns Manville in a building-products segment that reported US$3.7 billion of revenue and US$516 million of pre-tax earnings in 2002 dollars. Those segment totals were not MiTek-only figures, but Berkshire specifically reported higher sales of connector plates and related products during the year. The acquisition fit Berkshire's decentralized model because MiTek's managers retained operating responsibility while Berkshire controlled capital allocation and evaluated the return on the purchase. The photographed Worcester Six facility is a later British operating-site anchor rather than evidence that the 2001 agreement was negotiated or signed there. Its manufacturing and distribution scale illustrates how a company bought for connectors and engineering software could expand as an international building-components platform under long-term ownership. Photo: Chris Allen, CC BY-SA 2.0, via Geograph Britain and Ireland and Wikimedia Commons.