Waukee Engineering Co. Inc., a Milwaukee manufacturer of flow measurement and control products for heat treating furnaces, was recently acquired by Nitrex Metal Inc., a Saint-Laurent, Quebec based manufacturer of heat treating equipment.
Financial terms of the sale were not disclosed. Corporate Financial Advisors, a Milwaukee-based firm that offers investment banking services, among others, represented the family of Robert Onan, the former owners of Waukee Engineering.
The sale also included Furnace Control Corp., a company that Waukee Engineering had purchased in 2001, said Andreas “Andy” Melville, president and general manager of Waukee and Furnace Control. Waukee Engineering has 25 employees and Furnace Control has eight workers.
Both companies are headquartered at 5600 W. Florist Ave., Milwaukee.
The purchase of Waukee and Furnace Control will give the two companies access to more support, technology and products to sell, Melville said.
“For the organization, now we are part of a bigger group,” he said. “We’ve gained strength and support, product lines, distribution and international service.”
Waukee has been in business for about 50 years, and has a significant market share in a line of meters that measures temperatures and conditions in heat treating furnaces. The company has a high reputation for quality in the United States, said Joe Froelich, a managing director of investment banking at CFA who worked on the sale of Waukee.
“It’s (Waukee) a market standard,” he said. “Almost any heat treating facility you go into has Waukee meters.”
That position hade the company an attractive target for Nitrex, Melville said, because Nitrex has good sales channels around the world but not in the U.S.
“The new owners want market penetration into the U.S.,” he said. “And we made a lot of sense to combine with them. They’re strong in Europe, South America, China and everywhere else.”
Operations at Waukee and Furnace Controls will not change significantly, Melville said.
“We will operate as we did before but with an influx of products,” he said. “We are a stable, solid company, and I think we’ll have a gradual increase in demand for our products. This will be a gradual transition, one that will be beneficial for us all.”
The two companies have already started selling Nitrex’s products, several of which have technology that Waukee wanted to develop.
“What was so attractive to us is the technological expertise and product line,” Melville said. “It’s been tried and tested in Europe, and now it’s available to us. We don’t have to develop it. These are things we wanted to develop, control instruments that we needed to stay competitive.”
Nitrex has its own software development department, Melville said, which will allow some projects that Waukee had in the works to proceed. Because the company did not have its own software development team, it needed to hire outside developers previously.
The board of directors that previously controlled Waukee was extremely conservative, Melville said, and didn’t want to invest in research and development that could not guarantee positive outcomes.
“The venture capital mentality was a low priority,” he said. “Development costs can be high and the return is not guaranteed.”
Waukee and Furnace Controls have had about 15 percent annual revenue growth in the last five years, Melville said.
The company’s good financial health and recent growth led to several interested bidders, Froelich said, which in turn led to favorable business terms for the Onan family.
“There were a number of interested parties and it was an active and aggressive bidding process,” he said. “The owners were able to obtain a deal with virtually no post-closing indemnifications. They get to walk away and there are very few strings attached. That’s very unusual in these circumstances. It’s as close to a clean break as I’ve seen in my experience.”
The new products and the support that Nitrex brings to Waukee will boost the company’s already robust growth, Melville said. As sales grow, the company will hire new service and support employees.
“It has to be predicated on sales,” Melville said. “It’s all driven on sales.”
Waukee and Furnace Controls are housed in a 35,000-square-foot building. The companies could substantially increase their output without hiring many more workers, Melville said.
“We have the capabilities for a substantial increase in production even with the people we have in house,” he said. “We might need some limited hiring, but we’re lean here.”
Waukee Engineering Co. Inc.
Address: 5600 W. Florist Ave., Milwaukee
Industry: Flow measurement and control products for heat treating
Employees: 25 at Waukee, eight at Furnace Control Corp., which is owned by Waukee
Web site: www.waukeemeters.com
New corporate parent: Nitrex Metal Inc.
