Jendusa sells company and tackles his next challenge.
“Fake it ’til you make it” is a fitting mantra for Jerry Jendusa’s entrepreneurial journey.
Back in 1995, he had five years of aviation industry experience under his belt and was working as a health care technology sales manager.
He wanted to use his aviation background to start a new business that created unique, niche products and provided value-added service in the aerospace industry. And the culture of the company must be unique, too.
But how could he start a company like that without any manufacturing experience? Enter Jim Harasha, a coworker with an electronics and manufacturing background.
“He was the IT manager, and I was the sales manager,” Jendusa said. “We threw out a lot of different ideas, and there was one thing that stuck with me. In aviation, it’s all about saving weight, so the more weight you can save on the aircraft, the further an airplane can travel or the more customers can sit on a plane.”
By combining their complementary skillsets, the two paired up to form Electrical & Mechanical Technologies, or Emteq, out of Jendusa’s basement in Wind Lake.
At just 27, Jendusa was going out on sales calls with 37-year-old Harasha and inventing titles for himself so he would be taken seriously.
“I used to make up titles, used to call myself national account manager instead of president or CEO because, one, I was young and, two, we didn’t have any customers,” Jendusa said. “What type of credibility are you going to have as CEO? People used to ask, ‘Who are some of your customers?’ And I’d say, ‘Well, I’m dealing with such and such,’ but we had no customers.”
One of the first companies the pair met with was Toronto-based airplane manufacturer de Havilland Aircraft of Canada Ltd. Luckily for the green entrepreneurs, de Havilland was overweight on an aircraft and needed a quick solution.
“They wanted that product so bad, it was all engineers that spec’d the product in, and there were no purchasing people in the room to ask some of those questions about, ‘Well, what are your annual sales?’ ‘How long have you been in business?’ ‘What are your quality certifications that you have in place now?’” Jendusa said. “And they spec’d us into that aircraft while I was working out of my basement. So that was a really lucky break.”
Jendusa traded his Macintosh computer to a friend in return for marketing services. She designed a brochure as Jendusa created part numbers to fill it for the meeting in Toronto.
“We didn’t have a product, but we had product specifications, working with suppliers. We had to make up part numbers,” Jendusa said.
That order gave Emteq staying power. Jendusa was able to quit his day job in April of 1996, and the company made its first delivery in October of that year. It soon moved into a permanent space in Muskego.
Today, Emteq is based in New Berlin and has about 650 employees, seven total locations and more than $100 million in sales. More than 300 of those employees are in New Berlin.
The company manufactures aircraft interior and exterior lighting systems, as well as aircraft cabin management and power systems.
A significant part of Emteq’s growth has come through international acquisition and expansion.
“As we put the model together, we could quickly design product, certify the product, but then we also could certify the product that was on the aircraft, so it accelerated the throughput of our product development, gave us some new customers, some complementary products,” Jendusa said.
Within five years, Emteq had annual sales of $10 million. It endured the aviation downturns following Sept. 11 and during the Great Recession, and came out fighting.
“(In 2008,) we lost about 50 percent of our business, just like that,” Jendusa said. “It was the new norm for business, but we stayed with product development, and we stayed with sales and marketing. We didn’t make major cuts.”
That continued R&D allowed Emteq to grow the business back from $65 million in 2008 to $100 million last year. Over the next three to five years, Jendusa expects Emteq will grow to $150 million in revenues.
A lucrative deal
At the $100 million mark, Emteq hit a plateau. In order to grow further, it would need to court the big airplane companies: Boeing and Airbus. One of the best ways to do that was through an existing supplier.
“We set out to explore strategic alternatives without being for sale, and we were very fortunate because we had a couple of partner companies that were very interested in us and we knew that,” Jendusa said.
Through a select process and helped by Chicago financial advisory firm Mesirow Financial, Emteq brought in key partners to evaluate the potential for a sale.
“We didn’t do it in a traditional way,” Jendusa said. “I did it more leading and asking questions about fit, about culture, about growth opportunities, about synergies between locations, because I was very sensitive about who was going to come in and cut jobs. And I was really sensitive to Milwaukee because this is where I’ve grown up.”
Emteq set up “fireside chat” meetings with interested partners in Chicago and Milwaukee, and executives flew in to make pitches. Emteq gave a presentation and planned to host a traditional data room for sharing confidential information with bidders, including Wellington, Fla.-based B/E Aerospace Inc.
“We never got to the point of opening it up, because B/E wanted this partnership so bad, when they came into Milwaukee, they literally took it off the market before we even put it on the market,” Jendusa said. “You never really know what the value of a business is in a strategic setting. The value far exceeded any of our wildest expectations.”
Publicly traded B/E, which manufactures aircraft cabin products and aerospace fasteners, announced June 24 it had signed definitive agreements to acquire Emteq and F+E Fischer + Entwicklungen GmbH & Co. KG, a German manufacturer of seating products for civilian helicopters.
Emteq commanded a lucrative sale price because it was a strategic fit for B/E and there were technologies, aftermarket certification services, products and talented people to complement its plans.
Jendusa won’t disclose the sale price, but market analysts have estimated the payout for both companies was around $470 million.
The new partnership allows more opportunities to accelerate growth. Interiors, seats, lavatories, oxygen systems and other complementary products will help Emteq grow, Jendusa said.
“What was right for the organization to do wasn’t necessarily right for me to stay with the organization,” he said.
The company had grown from six or seven shareholders to more than 20 shareholders as key employees invested. Jendusa was majority owner, but also had the expectation as CEO to maximize the shareholder return, which presented a conflict.
“We wanted to get into Boeing, we wanted to get into Airbus (and) there were certain shareholders that wanted to exit, that wanted to cash out,” Jendusa said. “We weren’t necessarily for sale, we weren’t going to sell to anyone, but it had to be the right strategic fit to allow the company to grow going forward.”
A culture change
Jendusa built Emteq on a culture that fostered collaboration, teamwork, open communication, feedback and empowerment. Jendusa, Harasha and Paul Schulls, chief executive-organizational development, human resources and continuous improvement, developed systems and self-directed teams to guide the company toward its goals.
Each employee receives a one-page plan that outlines the basic mission, vision, values and goals of the company. Employees make their own goals, aligned to the one-page plan, and review them with managers throughout the year.
“When we were able to fully deploy and execute on an annual plan throughout the organization, our business velocity increased dramatically because of how focused each staff member was on executing the plan,” Schulls said.
While there will be differences between the companies’ cultures and operations, and employees will have to adapt, Jendusa hopes some elements will remain the same.
“When I started Emteq, I set out to create a company that was going to be different, and it was going to be unique, and it wouldn’t be for everyone,” he said. “It would be maximized accountability. It would be empowerment. It would be gain-sharing and skin in the game and feeling of ownership and the ability to make decisions, putting guidelines in place but not necessarily policies, feeling that titles can be limiting factors…not interested in who reports to who, we all report to the customer. There’s really some very extreme beliefs that I personally have.”
The sale of Emteq closed in June, and Jendusa will exit the company at the end of August.
Jendusa, who in June won an Ernst & Young LLP Entrepreneur of the Year Award for the Midwest, wasted no time in developing a new company. His new company, Stuck LLC, aims to help other entrepreneurs and their businesses “get unstuck” – whether it be from financial strain or organizational roadblocks. Schulls and Harasha are also involved with the new project.
With Stuck, Jendusa hopes to help other companies use similar processes to those that made Emteq so successful. Stuck LLC will focus on business coaching, targeted investments and philanthropic donations.
Jendusa is passionate about training and development, and the coaching will focus on strategic plan execution.
“That’s what my role turned into at the end (at Emteq),” he said. “It was more developing the other leaders to lead. So I really wasn’t leading those departments and those divisions and those teams. I was setting more of the stage for the culture. I was setting more of the stage for the vision and the mission, and the rest of it was being done by the leaders that are running that organization today. So you almost have to work yourself out of a job and find something else to do.”
At Emteq, Jendusa helped organize an annual golf outing to raise money for Children’s Hospital of Wisconsin. The firm has raised $750,000 for the hospital.
The partners are still developing the philanthropic aspect of Stuck LLC but want to have a similar impact. The firm is in its infancy stage.
Schulls, who had a minority share in Emteq and is still employed at B/E, is doing some consulting for Stuck using similar principles to those he helped implement at Emteq.
“We’ve been very fortunate to experience business growth, but through it, we realized that our passion is helping other entrepreneurs do the same,” Schulls said.
“I want to share more of the issues that I had and the difficulties that I had and the mistakes that I made, versus the fact that ‘Oh I’m great, and I know how to do all these things,’” Jendusa said.
A new start
These days, Jendusa is as busy as ever networking with contacts and formulating his business plan. But he now has the flexibility to drop everything and go to one of his kids’ sporting events or to put off a business trip or to get involved with a new organization.
The ability to pick and choose like-minded clients at Stuck is a freedom afforded Jendusa by the financial windfall from the sale of his business.
“It’s easy to say you can do that, but if you don’t have any money, if you don’t have any cash, you almost have to take on any client just to make payroll,” he said.
Not having to worry about making payroll, having financial security for his family and having more flexibility are advantages. But Jendusa feels a greater responsibility today than when he was starting Emteq.
Second-generation challenges now come into play, and responsibilities with charitable giving are on his mind. He also has to do the investment and asset planning associated with the payout.
“You never want that type of thing to change who you are as a person, and that’s what I fear the most out of it,” he said.