Issue link: https://iconnect007.uberflip.com/i/1473479
34 PCB007 MAGAZINE I JULY 2022 Johnson: Right. Elsewhere in our recent cover- age, Divyash Patel refers to it as "basic hygiene." You think of it like brushing your teeth and combing your hair. It just needs to be done. Kastner: If you don't have ISO or UL, it's pretty tough to be in business anymore. It will be the same with cybersecurity: you must main- tain a certain level. Again, it's tougher for the smaller mom and pop shops to keep up with that. It's just another headache. Whereas the larger shops could spread that investment over a wider base and it's easier for them to do. I think it's another thing that will lead to more consolidation in the industry. Johnson: It seems like the trend is further con- solidation into fewer, larger, more capable companies. Tom, does that still leave a place in the market for a boutique company? Kastner: Absolutely. One thing you don't see too much of are greenfield investments, but I think it would be a fair number of niche compa- nies that are really good at one or two smaller markets. Typically, those niche markets are very profitable, so those companies can invest in equipment and other things, like cybersecu- rity. Johnson: Is this a good time for an OEM to con- sider a captive shop? ere are pros and cons to that approach. Certainly, keeping your IP all on your own campus is one advantage. Is now a time to follow the lead of Whelen Engineer- ing or Schweitzer Engineering Laboratories in Idaho? Kastner: Yes. ere's Schweitzer and some other small ones, right? It would be interest- ing to consider doing that. e problem is, of course, finding the right people to hire. Certainly, the talent pool is getting older. It's definitely an older industry. I wonder, between the permitting, the talent, and the amount of investment that's required, if the return on investment is strong enough vs. just focus- ing on your own products. Without knowing the calculations, it's hard to decide. Obviously, those two companies did their calculations and decided it makes a lot of sense. So, if it makes sense for them, it must make sense for others. At the same time, just being able to buy from the domestic market has its advantages. Everybody in the U.S. is having trouble find- ing any talent, from sweeping the floors all the way up to the CEO suite. ese compa- nies must decide whether they want to invest their time and money in finding talent for part of those supply chains, or if it's better invested in another part of the business. Johnson: I think that's something that is emerg- ing in our conversations for this issue. ere's money to invest. Investment is necessary to move forward, but it includes equipment, tal- ent, and security. You'll have to respond pretty much to all three, but in your own order. Kastner: at's right. Johnson: Tom, thanks so much for this conver- sation; it sheds much light. Kastner: You're welcome. I enjoyed the conver- sation. PCB007 Tom Kastner is the president of GP Ventures Ltd (www.gp- ventures.com), an Investment Banking firm focused on sell-side and buy-side transac- tions in the tech and electron- ics industries. GP Ventures has offices in Chicago and Tokyo. Tom Kastner is a registered representative of and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures. Curious about the basics of the M&A process? Read an additional interview with Tom Kastner on page 58.