While it’s not unusual for M&A deals to take months or even years to be finalized, the back story behind Ross Video’s latest acquisition stretches back decades.
In the early 1970s, John Ross was in hospital recovering from a broken leg when his friend Jim Leitch, the founder of Leitch Video (now Imagine Communications), stopped by for a visit. Leitch posed a question to his pal – who was then a senior executive at Montreal video equipment manufacturer Central Dynamics – that changed his life.
“He said, ‘Hey, John, why are you killing yourself doing this? You’re unhappy. Why don’t you just start your own company?’” Ross’s son David recalls. “There’s a Leitch Video, there’s an Image Video, you should start a Ross Video.’”
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The elder Ross took his buddy’s advice, and the rest is history.
Now based in Ottawa, Ross Video has become known worldwide for its state-of-the-art video hardware and software. The thriving 900-person enterprise just closed its 16th acquisition, buying Image Video – the same firm that served as an inspiration all those years ago.
“It’s not very often you get to do an acquisition that ties in with the origin story of your company.”
“It’s not very often you get to do an acquisition that ties in with the origin story of your company,” says David Ross, who is now in charge of the company his father founded in 1974.
“I’ve always known of Image Video my whole life, being part of that origin story. Then when we saw the opportunity to buy them and how they fit in to our current product portfolio, it was more than just a business decision. It was an emotional thing.”
Ross wouldn’t divulge financial details of the all-cash deal. But suffice to say Toronto-based Image Video, a family business with just 12 employees, has far more strategic value to Ross than the number that followed the dollar sign on the contract.
Image Video has rare expertise – it specializes in “tally control” software that signals which camera an on-air presenter is supposed to look at.
It might seem simple enough to make sure the right camera is lit up. But Ross says studios often host multiple broadcasts during the course of a day, with varying numbers of cameras that are sometimes controlled by remote technology. Ensuring all those systems can communicate with each other seamlessly is no easy feat.
“Believe it or not, there’s been half a dozen programmers working for the last 10 years on this software to figure out which red light to turn on at the level that national broadcasters need,” he says with a chuckle.
It’s a niche industry to be sure. Ross says “there are really only two companies in the world in this business,” and his firm now owns one of them.
That’s important to someone who likes to compare his company to Apple in the way it’s assembling a suite of products that fit together into a cohesive whole – much like how you can instantly connect with Apple TV on your iPhone.
“Every time you buy a new product from Apple, the reason to stay in Apple gets ever stronger,” Ross says. “The interoperability gets higher.”
So when Ross heard the Toronto company was on the market, he jumped into action.
‘A piece of a larger puzzle’
Ross Video already used Image’s software in its Emmy Award-winning openGear technology platform. But the company is developing ever-more complicated routing systems, and the CEO was worried that a competitor might snap up Image Video, limiting his company’s access to Image’s technology and potentially squeezing it out of the high-end router market.
“This is a piece of a larger puzzle,” he explains.
“Every one of our products ties into maybe as many as a dozen other products in highly integrated ways. When I buy another company, I look at how many different ways that they touch other parts of what Ross Video does. Usually it’s in a dozen different ways, and usually we know who those companies are. We’ve often been partnering with them for years. Usually if they get the call, they’re excited.”
Ross says a couple more acquisitions are likely coming down the pipe in 2021 as the firm continues to expand its video production capabilities. But as always, he’s in no rush to sign off on an agreement just for the sake of doing a deal.
“Sometimes, you think something’s a perfect fit, and then you get into negotiations and you find that they literally want 10 times more than the company is worth,” Ross says. “You go, ‘Good luck.’ We’re not buying companies at any cost.”