MEET THE DIRECTOR BULGIN

Making the right connections

John Wilson has overseen the growth of Bulgin as a public company and, since its acquisition by Equistone, as a private one. And there’s no doubt as to which has been the more enjoyable experience. He talked to PLATFORM’s Stuart Rock.

April 2023

IN 2019, JOHN Wilson was a frustrated man. Over the past nine years, he had been heading Elektron Technology plc, an AIM-listed holding company, where he had overseen the disposal of numerous businesses and sites in a ‘shrink to grow’ strategy that had resulted in three distinct and separate businesses. And it looked as though three would soon become two…

The oldest business in the stable was Bulgin, which had been founded in 1923 and had listed as a public company back in 1948. Within the holding company, it was a jewel – a 2% EBIT business when John joined, but in a global industry with huge potential for growth – it simply required unlocking. It was a natural candidate for sale to a competitor.

Instead, in what he describes as “a leap of faith,” Mr Wilson led a management buyout backed by Equistone in September 2019. As Group CEO and Bulgin Executive Chairman, Mr Wilson had hitherto spent half his time on Bulgin. Now, as its CEO, it had his complete focus. (The remaining business has been renamed CheckIt and Mr Wilson remains the senior independent director.)

Existing initiatives could be accelerated. Focused investment could fuel growth. Previously, Bulgin had been treated as a cash cow, says Mr Wilson. “We were spending less than one per cent of our revenues on developing new products, when it should have been six to eight per cent. We were spending less than one per cent of our revenues on marketing.”

In more ways than one, the transaction has really switched on the lights at Bulgin.

The company makes mission critical products: connectors and switches – essential components in almost all electronic equipment. It’s a huge global market in revenue terms; Bulgin is about the 90th largest connector company in the world – but it is a highly differentiated one. Its connectors are designed specifically for harsh environments and are tested well beyond conventional industry requirements. To certify a connector for the toughest industry standards of waterproofing, it must be pressure tested at half a metre for 30 minutes. Bulgin will test its products at 100 metres for two weeks.

To certify a connector for the toughest industry standards of waterproofing, it must be pressure tested at half a metre for 30 minutes. Bulgin will test its products at 100 metres for two weeks.

Its connectors can be found in tractors, factory robots, electric vehicles and every pedestrian crossing in the UK. The extravagant water fountains of the Las Vegas casinos are powered by Bulgin connectors.

While the R&D and design development is conducted in Cambridge – Mr Wilson himself is an engineer whose previous role was at Cambridge Consultants – the vast majority of Bulgin’s products are made in Tunisia. Six months after the transaction, the Covid pandemic hit. The factory in Tunisia was closed, losing eight weeks of production.

The pandemic strengthened the relationship with the new investors. “While this was a leveraged buyout with strict lending covenants, Equistone was very clear that it wanted to continue to invest; it wasn’t a case of battening down the hatches. We continued to look for good people; we continued to plan for our new facility in Tunisia.”

And Bulgin bounced back. In the following two years, revenues doubled.

For Mr Wilson, it has also demonstrated the advantages of taking the business under private equity ownership.
“We traded in having many shareholders with different views and opinions, all of whom wanted to see an increase in our share price to realise a gain, for a single set of shareholders, who support us to grow the business in the best possible way.”

Equistone's Paul Harper and Tristan Manuel

With this “true alignment” between shareholders, Mr Wilson says he can focus on the upside even when there are downside risks to manage.

The challenge he receives at board meetings has a more constructive edge: “the board is focused on how we can grow the business quicker rather than being concerned about missing the next half-year results. We can grow the business recognising that there will be peaks and troughs over the ownership cycle rather than reacting on a monthly basis.”

“If you are extremely driven and competitive and have the desire to win, private equity is a very good place for a CEO. There’s no hidden agenda. On the public markets it is much more challenging and it can be more of a political game than truly leading a business.”

And this is not a conventional business that Mr Wilson is leading. “We do everything differently from our competitors – and that translates into best-in-class margins.”

Take Bulgin’s go-to-market strategy. Uniquely in its industry, most of its revenues are generated through distributor channels. (The norm is between 15 to 50%.) Some 700 distributor locations provide distribution through 60 countries.

It’s an approach that has defied the industry convention that companies can’t get close to, or understand the needs of, their end customers.

With Equistone’s support, Bulgin’s team have built a data intelligence dashboard to gain insights from their distributors about their combined 75,000 end customers. “We know who they are, what they bought, where they’re located, and the applications for which their equipment is being used. We use our data to identify good customers and to support our distributors to approach them. “We can show that if a customer buys Bulgin products twice in a year, over the next five years we will retain 90% of those customers and that the value of their purchases will increase fivefold.“

Distributors also like Bulgin’s sector-agnostic approach. “We don’t design particular connectors for particular sectors; we design them to transcend sectors.” This range gives distributors access to many more customers. This also means Bulgin can smooth out peaks and troughs of demand over the economic cycle.

In R&D and design development, too, Bulgin focuses on being different. Under Equistone’s ownership, the size of the engineering team has increased from three to 20 and a rapid response team has been built up.

Mr Wilson is a great believer in Henry Ford’s adage that if he had asked his customers what they wanted, they would have asked for a faster horse. Sometimes you must lead your customers. “We’re looking at how we can integrate graphene into our connectors to reduce their size and improve their performance, or the interconnection of humidity sensors to predict failure and improve preventative maintenance.”

“Customization is a big growth area,” says Mr Wilson. “We are best in class performers; we will quote within 48 hours and provide a sample within seven days. None of our large competitors can get close. This is a capability that we have built from scratch and we’re very proud of it. It is creating a pipeline of opportunities that we are converting at a high rate.”

Equistone’s values resonate with my own and that of Bulgin – complete transparency, ethical working relationships, being constructive and supportive.

Another area of rapid improvement has been the company’s ability to retain and hire talent.
The company employs 650 people with about 570 in Tunisia. “We have more degree-qualified people in the Tunis management team than we have in the UK or the USA,” says Mr Wilson. Meanwhile, in the UK, the company’s Net Promoter Score has gone from negative to positive 76. “Good people want to work at Bulgin,” he says.

“Equistone’s values resonate with my own and that of Bulgin – complete transparency, ethical working relationships, being constructive and supportive. We can be much more open about our growth projections and the issues that we face. The relationship I have with Paul Harper and Tristan Manuel is completely open. Nothing’s hidden – and that has been so refreshing.” ☐

Since publication, Equistone has agreed the sale of Bulgin to Infinite Electronics Inc, a global portfolio of leading in-stock connectivity solution brands.

A full version of this article appeared in PLATFORM 08, Winter 2022/23