It has been a bit of a rollercoaster ride for everyone at AudioControl over the last couple of years. The company, a leading specialty manufacturer of integrator-focused, high-quality audio electronics, has had three different owners in the last two years. Have they finally found their new home?
See my update on the AVPro Global acquisition of AudioControl
Sioux Falls, SD-based AVPro Global, also a specialty manufacturer of high-quality integrator-focused electronics for residential and commercial channels, acquired AudioControl in August 2023. This transaction made AVPro Global the third owner of Seattle-based AudioControl in 24 months as they had acquired it from AAMP Global, a specialty manufacturer of products for personal and commercial vehicle markets. AAMP Global had previously acquired AudioControl from its former owner Alex Camara in March 2022.
I have a love/hate relationship with acquisitions…mostly hate. Studies show that something like seven or eight out of every ten acquisitions fail to add shareholder value. Looked at another way, that means only two or three times out of ten are acquisitions successful. It is a real challenge to blend two independent companies into one – there are process issues, financial issues, policy issues, cultural issues, management issues, and more. There are more issues than an episode of The Real Housewives of Hollywood…
Is This the Holy Grail?
If the parties can sort all of that out, you might end up with the Holy Grail where both subsidiaries are mutually supportive and jointly empowered. When that happens, the new whole can end up being greater than the sum of its parts…one plus one equals three. But as the data shows…it’s a long shot.
Strata-gee has been following AudioControl for many years, as the company has developed into a nimble, aggressive, and innovative partner for the custom integration community under the leadership of Camara. When he sold the company to Clearwater, FL-based AAMP Global it initially seemed like a good fit. AAMP Global had a good-sized business providing electronic solutions for the vehicle market. Likewise, AudioControl at that time, in addition to its residential business, also offered innovative audio systems and solutions for the automotive market as well.
No Home for AudioControl Residential at AAMP
However, at the time, I had some misgivings. It was clear to me that while AudioControl’s and AAMP Global’s automotive businesses could mesh well, there was no home in the AAMP universe for AudioControl’s successful residential business.
In an interview with AAMP Global’s President of North America Herb Brown, he told me that they were excited at the prospect of diversifying their business into the residential and commercial integration business. It was nice of him to say that, but I just failed to see the logic behind the sentiment. It seemed just as likely that residential would become a distraction – the red-headed stepchild of the AAMP Global organization.
Palpable Sense of Logic
Then seven months ago, AVPro Global acquired the company, and there was an immediate and palpable sense of logic to this pairing. The two new partners are more similar than distinct. Both are completely focused on the custom integration community. Both companies are intensely customer-focused, to a fault. Both are positioned as top specialty electronic solutions in their respective spheres of influence.
But at the same time, they don’t step on each other’s toes. AudioControl has always been the audio specialist, focused on offering higher sound quality, the latest technologies and features, and strong dealer training and support. AVPro Global makes products that just work and that integrators can rely upon – they are HDMI specialists, networking specialists, and connectivity experts. And, unlike many in custom integration, they are building and delivering their own gear from their own factories. And like AudioControl, AVPro Global excels at customer service and support.
The more you look at these two partners, the more you see the harmony…
Recently, I spoke via Teams with Chris Kane, Vice President of Sales and Marketing for AudioControl; Matt Murray, Chief Technical Officer with AVPro Global; and, Juha (pronounced youยด ha) Nurminen, Director of Engineering for AVPro Global. The purpose of our conversation was to learn just how the integration of AudioControl into the AVPro Global family was going.
Here Then is an Excerpt of My Conversation with the AudioControl/AVPro Global Executives
STRATA-GEE: Let’s start with an overview of how things are going and perhaps you could share what has transpired over the last seven months since the acquisition.
Chris Kane: Lots and lots of cool stuff has been happening. Some of the things we needed to address were more administrative and behind-the-scenes. But we’ve come out of this to where, at this point, we’re stronger now than we ever have been on a lot of fronts…including from a manufacturing standpoint and an engineering standpoint. I just think that the nice thing is, throughout all this, the AudioControl brand in the minds of the dealers has still been held in high esteem. You know, people are still looking at us for performance products.
We’ve always had a very strong engineering team, but in the transition from AAMP, we lost a few folks. And so it was like, ‘Okay, how do we get back to that level?’ Interestingly enough, we’ve always built really good amplifiers, but the vision was we needed better connectivity going forward. You know, the world is changing, you can’t just have really good RCAs & XLRs anymore. You’ve got to have HDMI, eARC, Dante, network, control…things like that.
So when Jeff and Matt Murray introduced me to Juha [Nurminen, Director of Engineering], well, his background ironically is in HDMI, eARC, Dante, network…and I thought, “Hey, we’ve got a really good thing here” and he and I kind of hit it off. And then we’ve also backfilled the engineering team with some other people there too.
Engineering a Strong Two-Company Technical Connection
STRATA-GEE: What were the first steps taken on the engineering side in the process of integrating these two companies?
Juha Nurminen: Sort of the key point since day one has been just to carefully kind of evaluate the process we have, I mean, the entire design cycle of the product. We now have changed the way we complete the product definition from the start, how we build the prototypes and production parts, and how they make their way through the assembly floor, all the way down to the shipping station. We like to talk about the magic, but it’s really, an ongoing process to improve efficiency…that’s the key. There’s always something that we can improve in efficiency, but the focus is on how we can tie that efficiency – feedback from the manufacturing floor and from assembly – quickly back to engineering. That feedback loop helps to optimize a lot of our designs.
It’s the same thing with RMAs (return merchandise authorizations, returned goods), I mean the way we’re dealing with potential RMAs – whether they are designed related, or if they are just the result of a change of mind – we want to get that feedback quickly to engineering to have all of that incorporated into future designs as well.
Prototyping is also something that we’ve been focusing on quite a bit. Right now, we have three different geographical locations where we can build prototypes, and everything’s done in-house. And if we use components from our own stock, the library we have in-house, we can we can make prototypes in a very expedited manner now. This is extremely exciting for the entire engineering team and basically allows us to build products faster.
As Chris mentioned, we’ve been able to hire more engineering personnel – key people in the right positions. So there’s a lot of details we’re looking into – a range of different kinds of technologies and topologies. It’s true that AV Pro is very well known for networking, as well as HDMI expertise. So all of that expertise is now going to be used in AudioControl products too – which means that we can essentially elevate a lot of products to the HDMI 2.1 standard. So we’re doing 40 gig and 48 gig video connectivity in these products, as well as of course eARC transport for audio.
Additional Post-Acquisition Investments in Building Inventory & Slashing Backorders
Matt Murray: What I think we brought to the table was some really strong engineers – like Juha, and Bob Nunez, who has built some of the most premium stuff in the world. We really do have kind of a dream team of engineering going on specifically around audio. We’re trying to blend r&d – new, new, new things – but also not losing sight of the things that we just can give facelifts to, give new features to, meet some new market requirements, and stuff like that.
We came into the acquisition knowing we had a problem – AudioControl was dealing with backorders. This is going to cost money because we need to buy components. So we need to over-buy things beyond what the current run rate of the product is because we need to nail down a huge list of backorders. But also we needed to improve processes.
[ED: Fortunately, with AVPro Global’s manufacturing capabilities and other resources, they were able to turn AudioControl’s backorder situation around.]
Our biggest challenge right now is figuring out where we’re going to put the product because we’re building to inventory levels now, instead of building to current orders. We are planning for growth, so we’re putting product on shelves. And what that means is we need space to keep that product – and you know…it’s good to see.
Order Fulfillment: From 6-8 Weeks to Next Day Shipping
STRATA-GEE: How serious was the AudioControl backorder problem?
Chris Kane: If someone placed an order with us in July or August of last year, in some cases, it would take six to eight weeks to ship, depending on the model. But now, just to give you an idea, we had a dealer place two orders this past Monday, and he called yesterday [Wednesday] to add something to the order. We had to say “No, it shipped yesterday [Tuesday].” I think things are shipping almost the same day within hours.
I was joking with some of my reps the other day, telling them we’re shipping products to dealers now before they even order them.
So we are getting a lot of customers back that would love to use AudioControl versus something else, but they didn’t have the ability to wait in the past…and that wait time is now gone. And to Matt’s point, we were building and buying probably more conservatively with the previous ownership group, with their focus being more on 12 volt. Now, all of a sudden, we’re thinking about home.
Matt Murray: One of the core things at AVPro Global when we started the company was always to do anything we could for the dealers. We still ride that today. I mean everything we do has to be in the best interest of the installer, from how we design UIs and design products, to how we design programs.
The reason we stock inventory is because we understand how these jobs go. Integrators may call us and say hey, I have this job but I need this thing by tomorrow. So we want to foster that and that’s on us. That’s why we invest our company dollars to hold this inventory for dealers. We’re here to be a service to our dealers and part of our value proposition is we will have stock for you when you need us.
Merging Companies is Very Challenging
STRATA-GEE: So it sounds like merging the companies post-acquisition has been relatively easy.
Matt Murray: Merging companies is very challenging. I’m happy to hear that it’s kind of coming off like it’s going swimmingly, but you know, a lot of the hair I don’t have on the top of my head disappeared over the last several months! It’s a tremendous effort to get these things aligned. I’ve been to China three to five times since this acquisition happened to make sure that things are happening the right way. We’re dealing with production in Sioux Falls, production in Seattle and then arranging engineering and deciding what is our r&d philosophy. We’re forming a lot of new processes in engineering and r&d, and then AudioControl is kind of adopting our processes. There hasn’t been too many issues…but it hasn’t been easy.
STRATA-GEE: How are your employees feeling about all this change?
Juha Nurminen: We have a very strong team of engineers right now. There is a lot of passion within the company. This is a very exciting time for everybody. I mean, this is because people are extremely interested in building the best things. We’re on that path right now…and it’s looking very good.
STRATA-GEE: Normally merging two different company cultures is difficult. Have you experienced any challenges in that process?
Matt Murray: We’re all like-minded individuals. Honestly, the culture has gone over extremely well. I mean, day one, we had Steve from AudioControl flying down to Florida to train the [AVPro Global] tech support team down there, and, you know, everybody just hit it off. Then we’ve been going to Seattle a lot. I would say that there has been some effort. I try to get down to Seattle once a month and we try to keep at least one person from the AVPro Global side there every week. And Chris came on board and you know, he’s obviously helped foster that step as the leader of the AudioControl group. Just making sure that there’s positivity around it as we start.
That’s the hard part and I think where it can go south is it’s easy to go negative in the early stages of acquisition. Now that I’ve been through one and see what it is like, you have to work hard to maintain the positivity and gain everybody’s trust for sure.
Blending Company Cultures: ‘You Have to Work Hard to Maintain the Positivity’ and Gain Trust
Chris Kane: I identified early on that the AVPro guys and we are very like-minded. We think about the customer first…like “what does the customer really want?” That’s what really matters, and everybody’s willing to do what it takes to make the customer happy. In some acquisitions, the bean counters get involved and all of a sudden all policies get changed for the wrong reason. Somebody’s just doing it to have a policy but we’re all thinking about the customer.
We’re also thinking about offering unique things that are not me-too products. and sometimes we get into the eternal debate of, “Alright, here’s something new there’s no data on.” Even if there’s disagreements, it’s refreshing that there’s so much give and take…no one is drawing a line in the sand. You know, it’s like, “Hey, what do we need to do?” There’s just so much mutual respect.
Matt Murray: It’s worth adding that AudioControl is a brand that we’ve known forever…since before we were in the industry. It’s such a phenomenal brand and such a great story. And it’s not been taken lightly from our side from the beginning, and it will never be taken lightly. It’s like, “Hey, this is an important brand to the industry,” and we really think that we can foster something here and put our heads together to take the current state of the business – which is good – and grow this thing to massive levels.
AudioControl Product Roadmap: What’s Coming?
STRATA-GEE: What about the product roadmap? Who is the product visionary in the company? What changes can we expect to see? Can you share any exciting new products that are coming soon?
Matt Murray: So before Juha goes and tells you everything we’re working on – there’s a lot of stuff in the works that we really don’t want to divulge right now. But, yes, there’s a lot in the works.
As far as product philosophy or direction, there’s really not one person who is like the brainchild of everything. Rather, there’s a small group in the company who pull together all of the information coming in from the field. It’s an extension of the fact that we’re servant leaders for the dealer. So the dealers know what they want and what they need and we just need to listen and add some innovation to it. That’s always served us really well in the past and it seems like it’s going to here as well.
But, yes, there are some big changes coming for sure. You’re gonna see a lot of the product line changing, especially with the addition of a lot of features involving network audio.
Chris Kane: Let me just add that Dante is a big part of our roadmap right now. As you know, we just introduced the Director with the Dante port on it and you’ll see more products like that. Once again, we think Dante is a very strong protocol for residential that isn’t even close to having been tapped yet.
Juha Nurminen: I would just like to add that customer feedback is extremely important, but we have a great team here that basically filters a lot of it. We listen to dealers and we trust them, but verify and then add our own expertise to that particular product. At the end of the day, we want to add something to the marketplace. I mean, it is an engineer’s dream, to be able to add and to contribute in a meaningful way to the current status quo.
Learn more about AudioControl by visiting audiocontrolpro.com.
See all that AVPro Global has to offer at avproglobal.com.
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