MiTek

Acquired by Berkshire Hathaway in 2001, MiTek is the world's leading producer of connector plates and related software for the truss industry.

Business Model

MiTek provides a "system" to truss manufacturers. They sell the connector plates (the "razor") and provide the engineering software and machinery (the "razor blade") needed to design and build roof and floor trusses. This creates a high level of customer stickiness.

Berkshire Acquisition

Manager: Gene Toombs (CEO at time of acquisition).
Rationale: Buffett was impressed by MiTek's dominant market position and its "ecosystem" approach to the industry. It represented a classic "brick and mortar" business with a technological moat that was hard for competitors to replicate.

Quotes

"MiTek is the world’s leading producer of connector plates... It’s a textbook example of a business that is the best at what it does." — 2001 Letter

📚 Historical Mentions & Citations (1)

Click a reference document below to expand and read the exact paragraph(s) containing this concept in the archive.

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2001 LetterExcerpt Available

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Our star-studded group grew in 2001. First, we completed the purchases of two businesses that we had agreed to buy in 2000 — Shaw and Johns Manville. Then we acquired two others, MiTek and XTRA, and contracted to buy two more: Larson-Juhl, an acquisition that has just closed, and Fruit of the Loom, which will close shortly if creditors approve our offer. All of these businesses are led by smart, seasoned and trustworthy CEOs. A few days before last year’s annual meeting, I received a heavy package from St. Louis, containing an unprepossessing chunk of metal whose function I couldn’t imagine. There was a letter in the package, though, from Gene Toombs, CEO of a company called MiTek. He explained that MiTek is the world’s leading producer of this thing I’d received, a “connector plate,” which is used in making roofing trusses. Gene also said that the U.K. parent of MiTek wished to sell the company and that Berkshire seemed to him the ideal buyer. Liking the sound of his letter, I gave Gene a call. It took me only a minute to realize that he was our kind of manager and MiTek our kind of business. We made a cash offer to the U.K. owner and before long had a deal.

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