During the Future of Leadership CEO Speaker Series co-hosted by the University of Miami Patti and Allan Herbert Business School and McKinsey & Company, Eric A. Mendelson, HEICO Corporation co-president and director, told students how he seized a small, publicly traded equipment business and transformed it into a global, aviation-industry mainstay. To include how that process enriched HEICO’s employees and shareholders while turning a $25-million, South Florida firm with 200 employees, into a $4-billion, 10,000-worker business with workers in 25 states and 12 countries.
“Being open and honest led to success,” said Mendelson. “I’ve left, if you will, a lot of money on the table by treating people well.”
One hundred dollars invested in HEICO back in 1990, shortly after Mendelson acquired it, would be $82,000 today. If aspects of Mendelson’s journey sound Hollywoodesque, there’s some truth to that: HEICO’s headquarters are in Hollywood, Fla.
Before Mendelson knew what a balance sheet was, his father, Laurans Mendelson, was prepping his son for business success. Hardly surprising, given that the elder Mendelson was Florida’s biggest condominium developer before getting involved with HEICO.
“My father always included me in his business activities,” Mendelson recalled. “Starting at the age of 7, I remember answering telephones in one of his sales offices. And his partner came in and said, `Larry, this looks ridiculous—there’s a 7-year-old here answering the phones!’”
Mendelson and his younger sibling, Victor, “always had this tremendous interest in business,” he said. “The original plan was that my brother and I were going to go into business together and my father would continue working with his business partner, who passed away tragically.”
That was during the Reagan administration, when Mendelson had his eye on buying obscure HEICO, which opened its doors in 1957 as Heinicke Instruments Co. Mendelson, who has an MBA from Columbia University, spearheaded an effort by the three Mendelson men to acquire HEICO.
“We just wanted to build a good, solid industrial business,” he said. “HEICO was a publicly traded company on the American Stock Exchange that had a $25-million market cap. After a proxy fight and some ensuing litigation, we got control of the company at the very end of 1989.”
Mendelson, who was 24 when the HEICO deal was consummated, quickly found himself confronting buyer’s regret. “For the first five years, the results were not good!” he said. “But we were putting into place all of the things that ultimately made us successful.”
One was a decision to buy companies that would make HEICO the largest independent provider of FAA-approved aircraft replacement parts. Meeting the federal government’s understandably stringent requirements for aviation equipment was a tremendously arduous experience, Mendelson admitted.
Mendelson also executed bold initiatives on the human resource side of the equation.
“Early on, we put 10 percent of the company’s stock into the 401(k) plan, as a gift,” Mendelson said. “As a result, those shares we put into the plan have become worth over $2 billion. Today, when long-serving people retire from HEICO, they retire with seven- and eight-digit 401 (k) account balances.”
A board member of the Mt. Sanai Medical Center, in Miami Beach, and the former board chairman of Ransom Everglades High School, in Coconut Grove, Mendelson was asked if there are ironclad rules for building a successful business.
“First of all, do something that you love. Not every day is going to be successful or fun,” Mendelson responded. “So, it has to be something at the end of the day that you enjoy doing. Number two, be surrounded by people who you love being with. Because if you’re not happy being with them and working with them, it’s not going to work. It becomes work!”
