'I felt down, so I started my own business'

I've only ever bought one company, and I did that while I was being interviewed for a job. I had been running my own business out of a spare bedroom at my house in Bromley, Kent, for about eight months when I was head-hunted by General Instruments in the US. They wanted me to be their marketing director but I wasn't terribly interested.

While I was talking to them, though, I discovered they were selling a small subsidiary that made microwave components for military radars. That fitted well with the line I was importing and distributing - high-temperature, high-voltage capacitors for missiles. General Instruments let me buy their company - Nore Microwave - for $30,000, paid for out of its profits over three to four years. That was in 1972. It has a turnover of pounds 10m now, and an annual profit of pounds 1m.

I'm not really interested in buying companies. Apart from that one case, all the companies in the Densitron International group have been grown from scratch. There must have been 15 to 20 start-ups. I believe in intrapreneurism and encourage the firm's engineers - half the staff are engineers - to set up businesses if they have good ideas. They get some of the shares and can sell them back to us for cash or shares in the group if it goes well.

I suppose that's a reflection of my own experience. I worked in engineering, and later sales, until I was 38. I had designed railway signalling systems for India and televisions for Philips. But in the early 1970s I was head-hunted from Hewlett Packard to work for a small private company called KGM. There was no mental stimulation there to speak of and I became somewhat depressed. I felt I'd blown all my career options. My wife didn't like me being so down and suggested I start my own business.

We only had pounds 3,000 in savings, and there was a danger we might lose the house. The banks just said goodbye when I went to them, but the managing finance directors of Hewlett Packard UK were more supportive. They invested pounds 3,000 each in the business.

At first I was just importing the capacitors - which were worth pounds 50 each compared to 5p for run-of-the-mill capacitors. I put my brand name, Perdix, on them and sold them to big defence contractors such as Marconi and Plessey

One of the first new businesses I started was selling hi-fi speakers from Hungary. I offered my salesmen a bonus to take the speakers - we called them Minimax II - around to shops during their lunch breaks. Eventually the high-street consumer electronics chains became interested. We refused to sell to them but they just advertised the speakers at very low prices anyway and that upset our retailers. We knew we were going to be squeezed so we just wound the company up.

We ran out of cash, down to our last pound, several times. When that happens you put your head down and grind. Once I didn't take any salary for nine months.

But the toughest time was probably right after we floated in 1986. Three big US suppliers of computer displays decided they didn't want a listed company distributing their products. We lost 30 per cent of our pounds 10m turnover.

At about the same time, a new competitor started fighting us for the microwave components market. We managed to cut our costs, partly by switching from machine tooling to die- casting our parts, but the real turnaround came when we shifted from military to civilian work. We used to make 800 military microwave units a month at pounds 800 each. Now we make 25,000 units for mobile phones at pounds 35 each.

Our latest venture is in Japan. One of my engineers went on a trip there and fell in love with a Japanese woman. I told him to stay and see if he could come up with any business ideas. We're now selling them computers that run automated factories.

One thing I've learnt in business is that the way accountants value companies makes it hard for firms that grow organically. If you go out and buy a company, its full value shows up in your books, but if you build it from scratch all you can show is your initial investment. The only way our investors can recover the value we've built is if we sell a business, and that defeats the purpose as far as I'm concerned. A lot of what's driving mergers and acquisitions is that you can't value what you've built. It's a fundamental flaw in the system.