This is a strategic acquisition, not a financial one: We speak to the heads of Kramer and ZeeVee

• Features

• 08/08/2024

Like most deals struck in the AV world, the news when it breaks comes as a sudden shock, but when you dig deeper you find out it has been years (secretly) in the making. And that was the case when Kramer announced it was buying ZeeVee in early August. “This wasn't a shotgun wedding,” says Bob Michaels, ZeeVee CEO. “It was quite a long, extensive courtship, we’ve been talking for close to two years. The conversations started off as casual, and then at ISE this year things started to come together, and we agreed it's time we both got serious about this.” The discussion and negotiation process was careful and considered adds Michaels, “Some acquisitions don't work for a million reasons right? We had to figure out how this could work. What could you contribute and what could we contribute? Where do you need help and where do we need help?”

This deal for ZeeVee comes off the back of two other acquisitions for Kramer; UC Workspace (UCW) was bought in Feb 2022, and Ashton Bentley was purchased in June 2024. Is this part of a wider strategy for Kramer, or simply good business picking up innovative companies when they become available? “We believe that strategy leads to actions, not action leads to strategy,” says Gilad Yron, CEO, Kramer Electronics, who says this deal was part of a three-step process. “Each of these acquisitions serves a different purpose. A couple of years ago, we defined the UC market as a strategic market for us, one in which we need to take action to extend our portfolio and our footprint both organically and inorganically. The next step was signing a co-development agreement with AudioCodes (in Jan 2024). The third stage was the acquisition of Ashton Bentley. There is a thread connecting all the dots, starting from looking at the market needs, and understanding what the missing components are, and then addressing that by a partner build strategy.”

Kramer had identified the AVoIP segment as a key strategic areas for it to focus on as a company, “Hence this is where we have shifted investment,” says Yron. It has done this by adding new AVoIP products (the KDS-7, KDS-17 and the KDS-100) of its own, but also by acquiring ZeeVee because “they have a fantastic market reputation but also a deep expertise in this strategic domain for us,” adds Yron (pictured below).

So what attracted ZeeVee to Kramer? “One of the beautiful aspects of our market is that there is a friendly competition, we’d been in touch with the ZeeVee management team for some time, and there was a growing appreciation between the two sides, which led to a discussion about how can we take it to the next level,” says Yron. “ZeeVee has the ability to understand the customer needs and to connect it with the technology. They were missing a global footprint and the resources that we have, so we felt immediately that this could be a very good match and a fantastic synergy by combining the two forces.”

The companies also shared the same management philosophy too adds Michaels, “I believe the culture comes from the person at the top, and I saw in Gilad that he was driven, a realist, and a person who wanted his company to make a difference. He talked about the Kramer company culture, how people are treated and how they are recognised etc. We both saw eye to eye there, and these are all important aspects of then actually getting down to structure a deal.”

ZeeVee was one of the first companies to fully embrace an AVoIP product line, and it shipped its first AVoIP product back in 2014, “Way too early,” jokes Michaels. ZeeVee has outperformed its size for some time, even with steady growth it now only has 40 employees across offices in the US, UK, Germany, Singapore and India. But growth for smaller companies is a tough and slow road. “We were looking for outside funding,” admits Michaels, “All investment so far in ZeeVee was self-generated money, there’s been no external money, no bank loans, no line of credit, so we were looking for funding to accelerate growth. We met with Kramer and then the conversation moved to an acquisition.”

What are the other benefits of this deal for ZeeVee? “First of all, we get to be part of a much larger organisation with much deeper pockets and greater resources,” says Michaels. It’s not just money though he adds, “We're talking about smart personnel, they've got a very intelligent and deep engineering team in Tel Aviv and in India as well. That adds strength to our engineering group because we've suffered a little because we're so small, even though we do punch way above our weight in terms of getting products out and in timely fashion, and supporting products etc. We now have this opportunity to really build on the technical front, which is a tremendous incentive to everybody inside the organisation because we know what we can do.”

The deal will help ZeeVee grow around the world says Michaels, “Our challenge historically with gaining market share has been the number of people in our bandwidth. Now we have the ability to address needs in a much broader marketplace that we have been able to do. For example, we have one person in Singapore, Kramer's got a fully staffed office in Singapore. We have one person in in India, they have 25-30 people in India.”

Does this deal mark an opportunity for Kramer, formed back in 1981, to define itself as an AVoIP company, and tell this rest of the industry, ‘this is us’ now? “Yes, absolutely,” says Yron. “First of all, we are significantly increasing investment in the AVoIP domain from our perspective, but we’re also gaining a deep expertise between bridging between technology and customer needs. We believe that the ZeeVee organisation, when blended into the Kramer organisation, will become the centre of excellence for us for AVoIP, and really capitalise on the internal investments that we’ve made in the last three years.”

Going forward, what will happen to the ZeeVee brand name? “We are currently working on the integration plans between the two companies from products to R&D, marketing, branding and all of that. We will consider all of these decisions and decide carefully in the next coming months, including the brand name,” says Yron. What about the current ZeeVee staff, what is their future? “I will repeat what I what I said to the employees,” says Yron. “This acquisition is a strategic acquisition, not a financial acquisition. We are buying and merging the two organisations in order to foster innovation and accelerate growth. We are working very hard so there will be a place for every employee at Kramer as well as ZeeVee in this organisation. This acquisition is not about cutting some costs, it’s about driving growth toward the strategic domain. Also, for ZeeVee employees being part of a much larger organisation comes with the benefit of having multiple career paths in this organisation, so there is a place for every employee.”

Image credit: Shutterstock/Yossakorn Kaewwannarat