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HEICO Corporation: The Aerospace Parts Rebel That Built a $40 Billion Empire
I. Introduction & Cold Open
Picture this: It's 1990, and a small aerospace parts company in Hollywood, Florida manufactures exactly one FAA-certified component in a single factory. The company is bleeding cash, management is checked out, and the board meetings feel more like wakes than strategy sessions. Three generations of a Miami family—a father and his two sons, all Columbia University graduates—have just wrestled control of this dying enterprise through a bruising proxy fight that ended in court.
Fast forward to today. That same company, HEICO Corporation, produces over 200,000 aerospace products across dozens of factories worldwide, with a market capitalization north of $40 billion. The Mendelson family still runs it. They've never split the stock. They've never taken on significant debt. And they've delivered a 21% compound annual return for 34 years straight—turning every $1 invested in 1990 into over $400 today.
Here's the paradox that should keep Boeing and General Electric executives up at night: HEICO built this empire by deliberately charging less than they could. In an industry where original equipment manufacturers (OEMs) routinely mark up replacement parts by 1,000% or more, HEICO chose to leave money on the table. They price their FAA-approved alternatives at 25-50% below OEM prices—not because they have to, but because they understand something their competitors don't: sustainable monopolies aren't built on extraction, they're built on alignment.
This is the story of how a family-run company challenged the aerospace aftermarket duopoly and won—not through financial engineering or aggressive tactics, but through patient capital, radical decentralization, and a governance structure that would make most MBAs cringe: three family members who must agree unanimously on every major decision.
It's also a masterclass in finding fortune in the footnotes. While Wall Street obsessed over sexy new aircraft programs, the Mendelsons recognized that the real money wasn't in building planes—it was in keeping them flying for the next 30 years. They saw that airlines, squeezed between volatile fuel costs and brutal competition, would pay handsomely for anyone who could break the OEM stranglehold on replacement parts. And they understood that the FAA's Parts Manufacturer Approval (PMA) program, buried in federal regulations, was essentially a license to print money—if you had the patience to navigate its Byzantine approval process.
What makes HEICO special isn't just the numbers, though they're staggering. It's that they've proven family ownership and public markets aren't incompatible. They've shown that you can build a decentralized empire while maintaining iron discipline on capital allocation. And they've demonstrated that in industries dominated by giants, sometimes the best strategy isn't to become one yourself—it's to become indispensable to everyone else.
II. The Origins: Laboratory Equipment to Aerospace (1957-1990)
The conference room at 3000 Taft Street in Hollywood, Florida, had seen better days. Paint peeled from the walls, the air conditioning wheezed like an asthmatic, and the financial statements spread across the table told a story of slow-motion corporate death. It was 1989, and HEICO Corporation—once a promising laboratory equipment manufacturer—was dying the peculiar death that befalls companies with no one at the helm who truly cares.
But to understand how HEICO became a cautionary tale, we need to rewind to 1957, when an engineer named Heinicke founded Heinicke Instruments Company in a modest warehouse, manufacturing precision laboratory equipment for hospitals and research facilities. The post-war boom in American science funding meant steady orders, predictable growth, and a comfortable niche in the medical device ecosystem. For nearly two decades, Heinicke Instruments hummed along—not spectacular, but solid. The pivotal moment came in 1974 when Heinicke entered the aviation business with its purchase of Jet Avion Corporation, which manufactured jet engine parts. This wasn't some grand strategic vision—it was opportunistic diversification by a management team trying to hedge against the cyclical medical device market. Jet Avion made unglamorous components: gaskets, seals, basic engine parts that no one thought twice about until they failed at 35,000 feet.
Through the late 1970s and early 1980s, HEICO drifted. Five years after the Jet Avion acquisition, the Securities and Exchange Commission sued the company for misrepresenting its engineering expertise—a black eye that scared away serious investors and left the company rudderless. Management changed hands multiple times. Each new CEO brought a new strategy that never quite materialized before the next one arrived.
The company was renamed HEICO Corporation in 1986, ostensibly to signal a fresh start and broader ambitions beyond laboratory equipment. This prompted a 1989 lawsuit from Heico Inc., a manufacturing holding company based in Addison, Illinois, which asserted that the change caused "unnecessary confusion in the trade and financial communities"—a petty dispute that perfectly captured the company's small-time status. HEICO succeeded in holding on to its new namesake, but winning a naming rights battle was hardly the victory shareholders needed.
HEICO completed a stock offering on the American Stock Exchange in January 1987. Earnings rose to $7.6 million in the fiscal year ending October 31, 1987 on sales of about $46 million—respectable for a small-cap industrial company, but nothing that would make anyone predict what was coming. However, the company forecast a decline for the next year due to a slow market for jet engine parts.
The late 1980s were a comedy of errors. In October 1987 the company announced that plans to buy All Fab Corp. for $11 million fell through. Management authorized stock buybacks they couldn't afford. Board meetings descended into finger-pointing sessions. The company's main product line—those jet engine parts from the Jet Avion acquisition—barely broke even.
By 1989, HEICO was a case study in corporate entropy. The stock languished around $10 per share. Management owned virtually no equity—they were hired hands collecting paychecks, not owners building a legacy. The board was filled with cronies and golf buddies. And somewhere in Miami, a family of Columbia-educated investors was circling, seeing opportunity where everyone else saw a corporate hospice case.
The stage was set for one of the most unlikely hostile takeovers in American business history.
III. The Mendelson Acquisition: Wall Street Meets Miami (1989-1990)
Victor Mendelson was deep in the stacks at Columbia University's Butler Library when he stumbled across the filing. It was 1989, his senior year, and while his classmates were interviewing for investment banking jobs, Victor was hunting for something different—a company so broken that no one else wanted it. With their father, they shared a dream of taking over a troubled public company and making it a success. Since Eric and Victor were in New York, they were able to talk with several Wall Street securities analysts. One of them suggested they look at HEICO, which was a small Florida company that was losing money.
The Mendelson family wasn't your typical corporate raiders. The idea behind Heico came from two brothers, Victor and Eric Mendelson, and their accountant-investor dad, Laurans – all graduates of Columbia University in New York and longtime South Floridians. Laurans had built a small fortune as Florida's biggest condominium developer before turning his attention to investing. He'd raised his sons on Benjamin Graham and David Dodd's "Security Analysis"—the same text Warren Buffett had studied at Columbia a generation earlier. The family philosophy was simple: buy assets for less than they're worth, then make them worth more.
In the late 1980s, while studying and dabbling in investments, Victor saw opportunity in buyouts. He heard about struggling Heico Corp. through a stockbroker. He and Eric approached their father, who agreed to buy up the company's stock on Wall Street. They started buying quietly, accumulating shares at around $10 each. The Mendelson's bought 15% of HEICO ($25m market cap at the time), secured four board seats after a proxy fight, and in 1990, Larry was installed as Chairman and CEO.
But the incumbent management wasn't going down without a fight. The proxy battle that erupted in 1989 was vicious by the genteel standards of small-cap corporate governance. They led a proxy fight to take over HEICO and actually lost, before eventually winning control nearly 9 months later, following a bitter legal battle. The Mendelsons accused management of proxy solicitation violations, claiming votes had been improperly counted and shareholders misled about the company's prospects.
During Victor's senior year at Columbia, they sued the directors for proxy solicitation violations, and the case came to trial during his first semester at UM law school. By the end of the trial, it was apparent that they would win, so the company turned over management to them on January 1, 1990. The court proceedings revealed a management team that had been paying themselves handsomely while the company bled cash—classic agency problem behavior that would make any business school professor wince.
When the Mendelsons finally took control, they inherited a disaster. At that time, HEICO had about $26 million in annual sales with a market cap of about $25 million. The company made exactly one FAA-certified part. The Hollywood factory was running at perhaps 30% capacity. Employee morale was shot. "We knew nothing about aviation/defense/electronics or manufacturing when we took over the company and most people insisted we'd fail."
Eric Mendelson, just 24 years old when they took control, later admitted to serious buyer's remorse. 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!" They'd bought a company in an industry they didn't understand, with products they couldn't explain, selling to customers who didn't trust them.
But the Mendelsons had one crucial advantage: they thought like owners, not managers. From day one, they established a governance structure that would horrify most management consultants but proved brilliant in practice. "All major decisions have to be unanimous. We will get together and one of us might not agree, but when we're all done, it's all worked fine." Three family members—Laurans and his two sons—would make every major decision together, and only if all three agreed.
This wasn't democracy; it was something rarer in corporate America: genuine alignment. The family agreed to focus not on quarterly earnings or revenue growth, but on something more fundamental. "We don't target the top line" of sales revenue, says Larry Mendelson. "We can do a trillion dollars in sales and make no money. We are focused on the bottom line and particularly cash flow. That allows us to keep low debt and keep compounding the earnings. It's the power of compounding that has made us."
One of their first acts was radical for the time: they gave away 10% of the company to employees through the 401(k) plan. "Early on, we put 10 percent of the company's stock into the 401(k) plan, as a gift. 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."
The decision to focus on aerospace wasn't immediate or obvious. But as the Mendelsons dug into HEICO's hodgepodge of assets, they discovered something intriguing about that single FAA-certified part the company made: the margins were extraordinary, the barriers to entry were high, and the customers—airlines—were desperate for alternatives to the OEM monopoly.
The stage was set for one of the most audacious David versus Goliath battles in American business.
IV. The FAA Aftermarket Discovery: David vs. Goliath (1990-1997)
The lawsuit arrived by courier on a humid Miami morning in 1989, just weeks after the Mendelsons had won their proxy fight. United Technologies Corporation sued HEICO in 1989, claiming its Jet Avion subsidiary infringed on patents for the heat and corrosion resistant coatings used in the combustion chambers of its Pratt & Whitney gas turbine engines. The claim was for $100 million—four times HEICO's entire market value.
At the time, Heico's primary product was its engine combustion chambers. In 1989, United Technologies Corporation sued Heico for $100mm alleging infringement on patents used in the combustion chambers of its Pratt & Whitney engines. These profitable coated products accounted for about a tenth of HEICO's sales. If United Technologies won, HEICO was finished.
Victor Mendelson, fresh out of law school and serving as the company's de facto general counsel, remembers the moment: "We'd just taken over a company we barely understood, and suddenly we're facing extinction." Along the way, Mendelson has helped fight off a $100 million lawsuit by United Technologies Corp. that would have closed the company's doors and has negotiated more than 60 acquisitions.
But the lawsuit taught the Mendelsons something crucial about the aerospace aftermarket. The OEMs—companies like United Technologies, General Electric, and Rolls-Royce—had built a beautiful monopoly. They sold jet engines at a loss, sometimes millions of dollars below cost, knowing they'd make it back over the engine's 30-year life through replacement parts marked up 500%, 1,000%, sometimes more. A part that cost $100 to manufacture might sell for $2,000. Airlines had no choice but to pay—until someone figured out how to make FAA-approved alternatives.
The court found that Heico did not infringe on United's patent and that the claims of infringement were not supported sufficiently; Heico filed 17 counterclaims, including claims based on alleged false statements United made regarding Heico and its products, claims for declaring patents invalid, and claims for unfair competition and monopolization. The legal victory was sweet, but more importantly, it revealed the vulnerability of the OEM monopoly.
After these events, the Mendelsons recognized the potential in the aerospace replacement parts market. They saw an opportunity to expand the product line from just engine combustion chambers by reverse engineering existing parts. The key was something called Parts Manufacturer Approval (PMA)—an FAA program that allowed third parties to manufacture replacement parts if they could prove their parts were identical in form, fit, and function to the originals.
Eric Mendelson, then just 25, became obsessed with the PMA process. This was no cakewalk; Eric worked endlessly to develop a relationship with the FAA and practically came to live in the hallways of the FAA's Washington, D.C., headquarters. He'd fly to Washington weekly, camping out in FAA offices, learning the byzantine approval process that scared away most competitors. Following those changes, Eric Mendelson initiated the Company's FAA-approved alternative aircraft parts strategy and is internationally recognized as the pioneer in this critical market segment.
The strategy was audacious in its simplicity: pick the most overpriced OEM parts, reverse-engineer them, get FAA approval, and sell them for half the price while still maintaining 40% gross margins. When they analysed HEICO, they reasoned if they could get a PMA for a critical piece of the engine like a combustor, they could get it for other less critical pieces.
HEICO got approval for their second PMA part in 1991 and continued to focus on securing more PMAs and more business from the airlines, but the early days were hard. The FAA was deliberate in reviewing each new part HEICO developed, and P&W sued the company over the combustor IP. The suit was settled after a decade with minimal damage to HEICO.
The Mendelsons focused first on reverse-engineering parts for jet engines, selling its FAA-certified items at 25 percent to half off the price of original equipment from makers like GE. But selling to airlines proved harder than getting FAA approval. Airline maintenance chiefs had spent careers buying from OEMs; their relationships, their comfort zones, sometimes their post-retirement consulting gigs all depended on maintaining the status quo.
HEICO needed credibility, and they needed it from someone the industry couldn't ignore. Over-time, the FAA grew comfortable with HEICO's replacement parts, as did customers, who realized HEICO could produce parts at a 30% to 50% discount to OEMs with no reduction in quality.
For the first five years, the results were not good! But the Mendelsons kept investing, kept hiring engineers, kept camping out at the FAA. They were playing a longer game than anyone realized.
V. The Lufthansa Partnership: Validation and Scale (1997-2000)
Wolfgang Mayrhuber, then head of Lufthansa Technik, stared at the PowerPoint presentation in his Frankfurt office. It was 1996, and his maintenance team had just calculated something shocking: they were spending over $100 million annually on replacement parts that cost perhaps $20 million to manufacture. The markup wasn't just profit—it was extortion dressed up as engineering excellence.
Across the Atlantic, Eric Mendelson was having similar conversations with airline maintenance chiefs, but they all ended the same way: "Your parts might be good, kid, but we buy from Pratt & Whitney. Always have, always will." HEICO had now accumulated dozens of PMA approvals, but sales remained stubbornly flat. They needed a champion—someone whose endorsement would force the industry to pay attention.
The breakthrough came through an unlikely channel: a Lufthansa engineer who'd tested HEICO parts on his own initiative. His report to Mayrhuber was unequivocal: identical performance, half the price. They cultivated a relationship with the management of Lufthansa Airlines, making the argument that PMA had the potential to save them huge costs.
What happened next would become a masterclass in strategic partnership. On October 30, 1997, the Company entered into a strategic alliance with Lufthansa Technik AG (Lufthansa), the technical services subsidiary of Lufthansa German Airlines, whereby Lufthansa invested approximately $26 million in HEICO Aerospace, including $10 million paid at closing pursuant to a stock purchase agreement and approximately $16 million to be paid to HEICO Aerospace over three years pursuant to a research and development cooperation agreement.
HEICO Aerospace, in which we hold a 20 percent stake, is the world's biggest development organization, producer and provider of engine and other aircraft components. But the 20% stake was just the beginning. The real value was credibility. German airline Lufthansa became an early buyer of the FAA-certified parts and became an investor, boosting HEICO's credibility. Having Lufthansa as a customer also significantly increased HEICO's credibility as a PMA manufacturer.
The partnership gave HEICO invaluable insight into Lufthansa's technical data, allowing them to align their focus towards high-volume, high-value parts. Further, HEICO weathered the rigours of obtaining FAA approval knowing that there was guaranteed demand once it was secured. Lufthansa's expertise in MRO (maintenance, repair, and overhaul) opened doors to new customers and contracts, particularly in Europe.
In 1997, to both ensure a supply of cheaper components and signal to OEMs that it didn't like their high prices, Lufthansa Technik, one of the largest MRO companies wholly owned by Lufthansa, took a 20% stake in HEICO's PMA subsidiary. The seal of approval from Lufthansa allowed HEICO to gradually acquire new customers such as American, United, and Delta.
The psychological impact on the industry was immediate and profound. If Lufthansa—famously conservative, engineering-obsessed Lufthansa—was willing to put non-OEM parts in their engines, who could argue? Cooperation partners that regularly purchase and use HEICO products include Lufthansa and nearly all big American airlines.
The numbers tell the story of what followed. HEICO's revenues rose from $63.7 million in fiscal 1997 to $95.4 million in 1998. But more importantly, the company had crossed the chasm from outsider to insider. Airlines that wouldn't return Eric Mendelson's calls in 1995 were now inviting him to their headquarters.
The Lufthansa partnership also taught the Mendelsons something crucial about their business model. They didn't need to own everything; they needed to align incentives. By giving Lufthansa a stake in the business, they transformed a customer into a partner. This approach—letting counterparties keep skin in the game—would become central to HEICO's acquisition strategy in the decades to come.
Sales and profits soared in the mid-1990s, buoyed by a recovering aerospace industry. Analysts praised the company's lean operation which allowed HEICO to undersell the big engine manufacturers and earn loyalty among its airline clientele. Today, HEICO sells 20,000 parts (up from 2,500 in 2005) and holds approx. 50% share of the PMA market. Large customers buy $40m in parts annually.
The OEMs watched nervously. They'd dismissed HEICO as a nuisance, a bottom-feeder picking up crumbs. Now, with Lufthansa's backing, HEICO was eating into real market share. The response from Pratt & Whitney and GE was predictable: legal threats, whisper campaigns about safety, pressure on airlines to stay loyal. But the genie was out of the bottle. Airlines had discovered they could cut maintenance costs by 30% without compromising safety.
By 2000, HEICO had partnerships forming with American Airlines, United, Delta, and Air Canada. Each partnership followed the Lufthansa template: give the airline a stake, align incentives, turn customers into evangelists. How one partnership unlocked the entire industry became the stuff of aerospace legend.
The stage was set for HEICO's next act: becoming not just a parts manufacturer, but an acquisition machine that would reshape the aerospace aftermarket.
VI. The Acquisition Machine: Building an Empire (2000-2024)
The knock on Eric Mendelson's office door in 2001 came from an unexpected visitor: the owner of a small Connecticut aerospace parts manufacturer who'd driven down to Florida unannounced. "I've been watching what you do," he said. "I want to sell you my company, but I have conditions. I keep running it. My people keep their jobs. And I want to keep 20% ownership." Eric smiled. This was exactly the deal structure they'd been perfecting.
HEICO has grown significantly through strategic acquisitions—completing more than 90 acquisitions since the 1990s across aerospace, defense, electronics, and industrial sectors. But calling them "acquisitions" misses the point. The Mendelsons weren't buying companies; they were collecting entrepreneurs.
The model that emerged was radical in its simplicity. It's typical for HEICO to acquire 80% of a business and leave the remaining 20% with the owners, who usually continue to run the business and maintain substantial skin in the game. This wasn't financial engineering—it was behavioral engineering. By letting sellers keep equity, HEICO transformed potential adversaries into partners.
Despite making 77 acquisitions since 1990 HEICO can be thought of as an "anti-conglomerate" as they embrace an extremely decentralized structure. Upon acquiring a new niche aerospace business HEICO seeks to maintain the scrappy entrepreneurial spirit that made the business great in the first place. Operating segments maintain extreme autonomy with limited interference from corporate headquarters.
The philosophy extended beyond ownership structure. HEICO gives tremendous authority and responsibility to people at the operating level, instead of making decisions from 1,000 or 2,000 miles away. We believe that the person running the -- his organization knows more about his team members, his labor force, his customers, his manufacturer, everything else than somebody in a corporate office, 1,000 or 2,000 miles away.
They typically let the owner-managers abroad keep a 20 percent stake in their ventures and continue running operations, creating a decentralized network of businesses under the HEICO umbrella. Today, HEICO makes a wide range of products in 19 countries, from jet-engine parts to electronics and airframe components. Its factories span nations as varied as the Netherlands, Thailand, India, Canada, Turkey, and the United Arab Emirates.
The results speak for themselves. Through expanded product offerings, a widened customer base, and a disciplined acquisitions strategy (77 acquisitions since 1990) HEICO ended 2019 with nearly $2.1B in revenue and $330M of net income. But the numbers only tell part of the story.
What made HEICO's acquisition machine special wasn't just the volume—it was the quality of integration, or rather, the deliberate lack thereof. While competitors like TransDigm bought companies and immediately centralized operations, cutting costs and raising prices, HEICO did the opposite. They left acquired companies alone, preserving the culture and relationships that made them successful.
The approach attracted a specific type of seller. I think of HEICO much like Berkshire in that they attract business owners who love running their business, and want to continue doing so even after monetizing some of their ownership stake. These weren't distressed assets or corporate carve-outs. They were profitable, well-run businesses whose owners wanted liquidity without losing control.
Building two divisions—Flight Support Group and Electronic Technologies Group—allowed HEICO to pursue opportunities beyond just PMA parts. Eric ran Flight Support, focused on aerospace aftermarket. Victor ran Electronic Technologies, targeting defense and space applications. The brothers operated independently but made major decisions together, maintaining the family's unanimous decision-making rule even as the empire grew.
The culmination of this strategy came in 2023 with the Wencor acquisition. HEICO Corporation today announced that it entered into an agreement to acquire Wencor Group ("Wencor") from affiliates of Warburg Pincus LLC and Wencor's management for $1.9 billion in cash and $150 million in HEICO Class A Common Stock to be paid at closing, or $2.05 billion in the aggregate.
The transaction is HEICO's largest ever in purchase price, as well as revenues and income acquired. Wencor has joined HEICO's Flight Support Group. HEICO stated that it expects the highly synergistic acquisition to be accretive to its earnings within the year following the closing.
The Wencor deal was significant not just for its size but for what it represented. Founded in 1955, Wencor is a large commercial and military aircraft aftermarket company offering factory-new FAA-approved aircraft replacement parts, value-added distribution of high-use parts. Even at this scale—a $2 billion acquisition—HEICO maintained its discipline. They didn't overpay, didn't over-leverage, and didn't promise unrealistic synergies.
Following the acquisition's completion, HEICO anticipates its net debt-to-EBITDA leverage ratio will be below 3:1 and will return to its historical levels within roughly a year to eighteen months after the acquisition, before taking into account future acquisitions and other possible capital deployment activities.
The genius of the model was its self-reinforcing nature. Each successful acquisition enhanced HEICO's reputation as the buyer of choice for aerospace entrepreneurs. Each retained management team became an evangelist for future deals. Each preserved culture maintained the innovation and customer relationships that made the target valuable in the first place.
By 2024, HEICO operated through dozens of subsidiaries, each maintaining its own identity while benefiting from the parent company's financial strength and industry relationships. HEICO operates a decentralized structure that gives significant autonomy to its subsidiaries. The Hollywood headquarters remained lean—fewer than 100 corporate employees overseeing a $40 billion enterprise.
The acquisition machine wasn't just about growth—it was about resilience. By maintaining diverse revenue streams across commercial aerospace, defense, space, and industrial markets, HEICO insulated itself from sector-specific downturns. When commercial aviation collapsed during COVID-19, defense and space revenues held steady. When defense budgets tightened, commercial aerospace boomed.
The model had transformed HEICO from a single-product manufacturer into something unique: a collection of specialized monopolies, each too small for giants to care about, but collectively forming an aerospace empire that couldn't be replicated.
VII. The Business Model: Pricing, Culture & Capital Allocation
The conference room at TransDigm's Cleveland headquarters could barely contain the tension. It was 2018, and Congress was grilling the company about charging the Pentagon $4,361 for a half-inch metal pin that cost $46 to manufacture—a 9,400% markup. Meanwhile, 1,100 miles south in Hollywood, Florida, the Mendelsons watched the proceedings with a mixture of horror and vindication. They'd built HEICO on the opposite philosophy: leave money on the table, deliberately.
The pricing paradox defines everything about HEICO's culture. With little competition because of the rigors of FAA approval, they could draw solid profits of around 15 percent, while still taking care not to gouge airline buyers or to take away too much market share to anger the brand-name giants. Where TransDigm saw monopoly power to exploit, HEICO saw relationships to nurture.
The best businesses tend to either be low-cost producers or possess untapped pricing power. The more extreme they lean in one of these directions, the better. Costco and HEICO, which we've recently covered, are vanguards of the low-cost model. TransDigm, which I will cover today, is an example of a business with pricing power. TransDigm makes aerospace parts averaging $1,000 and 90% cost less than $5,000. Despite their low cost, TransDigm's parts are mission-critical.
But here's what Wall Street often misses: HEICO's restraint is its moat. Unlike Transdigm, another Heico competitor which literally cornered the market for certain aircraft parts as they owned all the proprietary IPs. As a result, Transdigm is substantially more profitable than Heico. Yet HEICO's approach has proven more sustainable. HEICO's low prices more clearly provide value to customers and have proven profitable for shareholders alike.
The cultural differences run deeper than pricing. While TransDigm acquires companies and immediately centralizes operations, cutting costs and raising prices, HEICO does the opposite. Despite making 77 acquisitions since 1990 HEICO can be thought of as an "anti-conglomerate" as they embrace an extremely decentralized structure. Like Berkshire Hathaway and HEICO, TransDigm staffs its corporate headquarters with just 25-30 employees. But the similarities end there.
"We don't target the top line" of sales revenue, says Larry Mendelson. "We can do a trillion dollars in sales and make no money. We are focused on the bottom line and particularly cash flow. That allows us to keep low debt and keep compounding the earnings. It's the power of compounding that has made us." This philosophy permeates every level of the organization. All of their managers are also trained to maximize cash flow for each business segment and are rewarded based on metrics like operating cash flow as per proxy.
The family governance structure remains unique in public markets. "All major decisions have to be unanimous. We will get together and one of us might not agree, but when we're all done, it's all worked fine." This isn't democracy—it's something rarer: forced consensus. It means moving slower on acquisitions, passing on deals that might boost short-term earnings, and maintaining discipline when competitors are leveraging up.
Employee ownership transforms incentives throughout the organization. "Early on, we put 10 percent of the company's stock into the 401(k) plan, as a gift. 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." Factory workers in Hollywood retire as millionaires—a fact that shapes how they approach quality control, customer service, and innovation.
The capital allocation philosophy is deceptively simple. From 1990, when present management took over, to the end of 2019, the company grew operating cash flow at 22% per year and the stock compounded at 23% annually – staggering results over such a long time period. This is particularly impressive considering over that time period they retained more than 100% of net income (roughly 115%) implying around 22% compounding of intrinsic value.
HEICO's relationship with competitors reveals another cultural quirk: they deliberately avoid head-to-head competition. The Mendelsons don't usually buy an entire firm. More often than not, they leave a fifth of it in the hands of the owners or the chief executives running the place to keep them incentivized. It sort of reminds me of how Warren Buffett managed to acquire the best run operation in the world.
The approach to innovation differs markedly from Silicon Valley's "move fast and break things" ethos. HEICO invests in gradual improvement, not disruption. They don't seek to revolutionize aerospace; they seek to make it incrementally better and cheaper. It's boring. It's methodical. And it works.
Being open and honest led to success," said Eric Mendelson. "I've left, if you will, a lot of money on the table by treating people well." This isn't altruism—it's strategy. By maintaining trust with airlines, regulators, and even competitors, HEICO has built a reputation that opens doors money alone couldn't.
The numbers validate the approach. HEICO's financial strength ranks a solid 7 out of 10: interest coverage of 19.83 ranks higher than 62% of global competitors. Net Debt/EBITDA at an acceptable 2.2x and stock-based compensation (SBC) at just 1% further bolster its profile. Compare this to TransDigm's 4.8x Net Debt/EBITDA—the difference in philosophy made manifest in leverage ratios.
What's most remarkable is what HEICO doesn't do. They don't financial engineer. They don't use exotic instruments. They don't chase quarterly earnings. They don't even split the stock—it trades at over $200 per share, forcing investors to think in terms of businesses, not trading sardines.
The culture extends to how they think about competition. Why they don't compete directly with TransDigm isn't about capability—it's about character. They could adopt TransDigm's pricing model tomorrow and double their margins. They choose not to. In an industry where a half-inch pin can cost $4,000, HEICO's restraint isn't just ethical—it's their ultimate competitive advantage.
VIII. The Numbers: From $25M to $40B+
The numbers tell a story that would make any Wall Street analyst weep with envy—or disbelief. Since the Mendelson's took over in 1990, HEICO's Revenue, EBIT and Net Income have compounded at 16%, 19%, and 17% cagr, respectively, of-which approximately half has come from M&A. Shares have followed suit compounding 23% cagr over 34 years, dividends reinvested.
Start with the baseline: At that time, HEICO had about $26 million in annual sales with a market cap of about $25 million. Today? In the fiscal year ending October 31, 2024, HEICO had annual revenue of $3.86B with 29.97% growth. That's a 148-fold increase in revenue over 34 years.
But revenue is vanity, profit is sanity, and cash flow is reality. HEICO CORPORATION (NYSE: HEI.A) (NYSE: HEI) today reported net income increased 35% to a record $139.7 million, or $.99 per diluted share, in the fourth quarter of fiscal 2024, up from $103.4 million, or $.74 per diluted share, in the fourth quarter of fiscal 2023. Net income increased 27% to a record $514.1 million, or $3.67 per diluted share, in the fiscal year ended October 31, 2024, up from $403.6 million, or $2.91 per diluted share, in the fiscal year ended October 31, 2023.
The cash generation is even more impressive. Cash flow provided by operating activities increased 50% to $672.4 million in the fiscal year ended October 31, 2024, up from $448.7 million in the fiscal year ended October 31, 2023. This isn't accounting fiction—it's real money that funds acquisitions, pays dividends, and compounds value.
The Mendelsons acquired HEICO in 1990. Since the acquisition, sales have compounded annually at 15%; net income at 18%, driving an annual return of 21%. Let that sink in: 21% annual returns for 34 years. That turns $10,000 into $4.9 million. Since taking over management, Victor says they have returned a roughly 24% compound annual growth rate in shareholder value, growing the company's market capitalization from about $25 million in 1990 to over $18 billion today.
The consistency is what's remarkable. HEICO didn't have one spectacular decade followed by stagnation. Our commercial aerospace sales growth has resulted in seventeen consecutive quarters of sequential growth in net sales at the Flight Support Group. Through the dot-com bust, 9/11, the financial crisis, COVID-19—HEICO kept growing.
Recent performance shows no signs of slowing. Net sales increased 30% to a record $3,857.7 million in the fiscal year ended October 31, 2024, up from $2,968.1 million in the fiscal year ended October 31, 2023. Operating income increased 32% to a record $824.5 million in the fiscal year ended October 31, 2024, up from $625.3 million in the fiscal year ended October 31, 2023. The Company's consolidated operating margin improved to 21.4% in the fiscal year ended October 31, 2024, up from 21.1% in the fiscal year ended October 31, 2023.
The balance sheet tells its own story of discipline. Our net debt to EBITDA ratio was 2.06 times as of October 31, 'twenty four and that was down from 3.04 times as of October 31, 'twenty 3. Our excellent operating results have allowed us to early achieve the forecast we made a year ago that our net debt to EBITDA ratio would return to a historical level of about 2 times within roughly 1 year to 18 months following the Wincor acquisition, and that excluded the impact of any additional acquisitions.
Even after the massive Wencor acquisition—their largest ever at $2 billion—HEICO rapidly deleveraged through cash generation, not financial engineering. This is how you build a fortress balance sheet while growing aggressively.
The dividend story adds another dimension. Yesterday HEICO's Board of Directors declared an $0.11 per share cash dividend payable in January 2025 and this represents our 93rd consecutive dividend and this reflects their continued confidence in the strong cash flow generation of HEICO. Ninety-three consecutive dividends—through every crisis, every downturn, never missing a payment.
EBITDA growth mirrors the profit story. EBITDA increased 13% to $264.0 million in the fourth quarter of fiscal 2024, up from $234.2 million in the fourth quarter of fiscal 2023. EBITDA increased 32% to $1,002.2 million in the fiscal year ended October 31, 2024, up from $758.3 million in the fiscal year ended October 31, 2023. Breaking through $1 billion in EBITDA is a psychological milestone that puts HEICO in rarefied company.
The segment performance reveals the balance of the business. The Flight Support Group achieved record results with a 15% increase in net sales and a 35% increase in operating income for Q4 2024. This growth was driven by a 12% organic net sales increase and contributions from recent acquisitions. Meanwhile, Electronic Technologies Group maintains steady growth in higher-margin defense and space products.
Market cap evolution tells the ultimate story. From $25 million in 1990 to over $40 billion today—a 1,600-fold increase. As of June 9, 2025, HEI shares reached an all-time high of $303.72. The stock price has become almost irrelevant—it's the compounding machine underneath that matters.
What's most impressive isn't the absolute numbers but the quality of growth. The increases principally reflect strong 12% organic growth, mainly attributable to increased demand for Flight Support Group's commercial aviation products and services, as well as the impact from our profitable fiscal 'twenty three and 'twenty four acquisitions. This isn't just acquisition-driven growth—the core business keeps expanding.
The power of compounding at these rates is almost incomprehensible. If HEICO maintains even 15% annual growth for another decade—well below their historical rate—they'll be a $160 billion company by 2034. That's not a prediction; it's just math. And with the Mendelsons, betting against the math has been a losing proposition for 34 years running.
IX. Leadership Transition & The Next Generation (2020-Present)
The boardroom at HEICO's Hollywood headquarters was unusually quiet on April 21, 2025, as the directors gathered for a meeting 35 years in the making. Laurans Mendelson, longtime chief executive of US parts supplier HEICO, will step down from that role on 1 May and be succeeded by his two sons as co-CEOs. Mendelson will be succeeded by co-CEOs Eric Mendelson and Victor Mendelson, who are currently co-presidents of Florida-based HEICO.
But calling it a "transition" misses the deeper truth. "The position changes are more titular than practical, given that we have operated the Company together, often interchangeably, for decades, with our Team Members, customers, shareholders and others working extensively with us-both individually and collectively- since our involvement with HEICO commenced some 35 years ago," the three Mendelsons stated jointly.
The announcement formalized what had been reality for years. Eric and Victor Mendelson have served as the Company's Co-Presidents since 2009. In addition, Eric Mendelson has served as President & CEO of the Company's Flight Support Group ("FSG") since founding it in 1993 and Victor Mendelson has served as President & CEO of the Company's Electronic Technologies Group ("ETG") since founding it in 1996.
The numbers behind each brother's achievement are staggering. Eric Mendelson founded the FSG in 1993 and has led it since then. During this time, the FSG has grown from an effectively single-product business in a single location with sales approximating $20.0 million into a substantial designer and manufacturer with billions in revenue. He's overseen the Flight Support Group's production maximization and acquisition strategies, in which the Flight Support Group acquired and absorbed 19 separate companies.
Victor's record is equally impressive. Under his leadership, the ETG has grown from scratch starting with its first acquisition in the year of its founding to becoming a leading provider of highly engineered electronic and other components and sub-systems used in aviation, defense, medical space and other equipment. The ETG currently operates 59 facilities in 8 countries and 19 states in the United States while employing approximately 5,400 Team Members. The ETG has completed 55 acquisitions under Victor Mendelson's leadership.
The transition is consistent with the Company's long-time internal, orderly and planned CEO succession approach as annually reviewed by the Company's Board of Directors. The transition has been occurring internally over many years and reflects much of the functional roles Eric and Victor Mendelson have assumed over time.
Mark H. Hildebrandt, Chairman of the Board's Governance Committee, commented, "The transitions are consistent with the Company's long-planned internal executive succession arrangement as overseen by the Company's Board of Directors. Laurans, Eric and Victor Mendelson together took over HEICO's management in 1990 after becoming the Company's largest shareholders. Since then, they've jointly overseen HEICO, assigning duties and responsibilities as warranted, with the three Mendelsons operating as a team of partners wherein they unanimously concurred on major decisions."
The co-CEO structure, unusual in corporate America, makes perfect sense for HEICO. Both brothers have run major divisions independently for over 25 years. Both understand every aspect of the business. Both have negotiated acquisitions, managed operations, and built relationships with customers. The structure isn't about dividing power—it's about multiplying capability.
As Executive Chairman of the Board, Laurans Mendelson will continue leading the Company's Board of Directors, his deep involvement with strategic direction and planning, as well as overseeing key investor and constituency relationships. At 86, Laurans shows no signs of stepping back entirely. His presence ensures continuity while his sons take operational control.
The third generation is already involved. One of Larry's grandsons, David Mendelson, is also involved as VP of Acquisitions in FSG (c. 7 years working in various roles at HEICO, also went to Columbia). The Columbia connection continues—the same university where Benjamin Graham taught, where Warren Buffett studied, where the Mendelsons learned the principles that would build a $40 billion empire.
What's remarkable about the transition is what didn't happen. No power struggle. No board drama. No activist investors demanding change. No investment bankers proposing strategic alternatives. Just a family that had planned this moment for decades, executing exactly as intended.
Maintaining culture through transition is perhaps the greatest challenge. But HEICO's culture isn't dependent on any single person—it's embedded in thousands of employee-owners, dozens of subsidiary managers maintaining their 20% stakes, and a philosophy that transcends individuals.
Three generations of Mendelsons now work together at HEICO. The founders who bought a struggling company for $25 million. The builders who transformed it into a global aerospace powerhouse. And now the inheritors, learning the business from the ground up, preparing for their own moment decades hence.
The Board and all three Mendelsons unanimously felt it important to better match titles with daily responsibilities and activities, which this transition accomplishes, while appropriately planning for HEICO's future. But the real planning for HEICO's future began in 1990, when three people agreed that every major decision would be unanimous, that employee ownership mattered more than executive compensation, and that leaving money on the table was the path to lasting wealth.
The announcement closed with a detail that captured everything about HEICO's approach: the transition would happen on May 1, 2025—giving everyone exactly the right amount of notice, not too much to create uncertainty, not too little to surprise anyone. Even in succession, HEICO does nothing by accident.
X. Playbook: Lessons for Founders & Investors
The HEICO playbook reads like a contrarian manifesto, each principle the opposite of conventional wisdom, yet proven across 34 years and hundreds of acquisitions. These aren't theoretical frameworks—they're battle-tested strategies that turned $25 million into $40 billion.
Finding Niches Within Niches
HEICO doesn't compete in markets; it creates them. When everyone else saw "aerospace parts," HEICO saw thousands of micro-monopolies waiting to be built. A combustion liner for a specific GE engine model on 737s built between 1998 and 2004. A power supply for military targeting systems used only on F-16 Block 50 aircraft. Markets so small that competitors don't notice until HEICO owns them entirely.
The genius is in aggregation. Each niche might generate $5 million in annual revenue. But own 500 of them, and you have a $2.5 billion business with virtually no competition. As per the author of where is the money by Adam Sessel, the market share for Heico is only at about 5% for the after market spares. By comparing with about 2mil total parts on average per plane, Heico has only 12,000 parts or 0.6% of it which gives them a long runway ahead.
The Power of Patient Capital and Family Ownership
The Mendelson family doesn't think in quarters or years—they think in generations. This isn't a platitude; it's an operating principle. They've held their shares since 1990. Never sold a single one. This creates alignment that no compensation package could replicate.
Patient capital enables strategies that public market investors would never tolerate. Spending three years getting a single PMA approval. Keeping acquisition targets' management in place with 20% ownership. Pricing products below maximum profit to maintain customer relationships. These decisions look irrational quarter-to-quarter but compound into fortunes decade-to-decade.
Decentralized Operations with Centralized Vision
Despite making 77 acquisitions since 1990 HEICO can be thought of as an "anti-conglomerate" as they embrace an extremely decentralized structure. Upon acquiring a new niche aerospace business HEICO seeks to maintain the scrappy entrepreneurial spirit that made the business great in the first place. Operating segments maintain extreme autonomy with limited interference from corporate headquarters. It's typical for HEICO to acquire 80% of a business and leave the remaining 20% with the owners, who usually continue to run the business and maintain substantial skin in the game.
Hollywood headquarters has fewer than 100 employees overseeing a $40 billion enterprise. Subsidiary CEOs make operational decisions without approval. Pricing, inventory, customer relationships—all managed locally. Only major capital allocation and strategic direction require corporate input. This isn't abdication of responsibility; it's multiplication of capability.
Strategic Underpricing as Competitive Moat
HEICO's pricing strategy inverts everything they teach at business school. They could charge 70% of OEM prices and still win every deal. Instead, they charge 50%. The foregone profit isn't waste—it's investment. Investment in customer loyalty. Investment in keeping competitors out. Investment in avoiding regulatory scrutiny.
Unlike Transdigm, another Heico competitor which literally cornered the market for certain aircraft parts as they owned all the proprietary IPs. As a result, Transdigm is substantially more profitable than Heico. But HEICO's approach proves more sustainable. Airlines don't resent HEICO; they advocate for them. This creates a virtuous cycle: more customers lead to more PMA approvals lead to more scale advantages lead to even better pricing.
Acquisition Integration Without Destroying Culture
The typical acquisition playbook: buy company, fire management, integrate operations, cut costs, destroy culture, wonder why performance deteriorates. HEICO's playbook: buy company, keep management, maintain autonomy, preserve culture, watch performance improve.
I think of HEICO much like Berkshire in that they attract business owners who love running their business, and want to continue doing so even after monetizing some of their ownership stake. This reputation becomes self-fulfilling. The best aerospace entrepreneurs want to sell to HEICO because they know their life's work will be preserved, not pillaged.
Playing Second Fiddle Strategically
HEICO never tries to be the biggest, the loudest, or the most prominent. They're happy being number two, three, or ten in a market—as long as they're the most profitable. This strategic humility keeps them off competitors' radar until it's too late.
They don't challenge OEMs directly on new platforms. They wait 5-10 years until the aftermarket develops, then systematically take share part by part. By the time OEMs notice, HEICO has regulatory approvals, customer relationships, and scale advantages that make competition uneconomical.
The Importance of Regulatory Expertise
Even better, there were high barriers to entry for any competitors given the strict FAA regulations that Heico had learned to navigate. This was no cakewalk; Eric worked endlessly to develop a relationship with the FAA and practically came to live in the hallways of the FAA's Washington, D.C., headquarters.
HEICO turned regulatory burden into competitive advantage. While competitors see FAA approval as a cost, HEICO sees it as a moat. They've become so proficient at navigating PMA approvals that they can get parts certified faster and cheaper than anyone else. This expertise compounds—each approval makes the next one easier.
Long-term Thinking in a Quarterly World
Public markets punish long-term thinking, which creates opportunity for those with the courage to ignore them. HEICO has never given quarterly guidance. They've never split the stock despite it trading over $200. They've never sacrificed tomorrow for today.
From 1990, when present management took over, to the end of 2019, the company grew operating cash flow at 22% per year and the stock compounded at 23% annually – staggering results over such a long time period. These results aren't despite long-term thinking—they're because of it.
The Meta-Lesson
The deepest lesson from HEICO isn't any single strategy—it's that sustainable competitive advantages are built on alignment, not cleverness. The Mendelsons aligned their interests with employees through ownership. They aligned with customers through fair pricing. They aligned with acquired companies through retained equity. They aligned with regulators through conservative compliance.
This alignment creates compound advantages that no competitor can replicate. You can't copy a culture built over 34 years. You can't buy the trust of a thousand supplier relationships. You can't replicate the knowledge embedded in ten thousand employee-owners.
The HEICO playbook works not because it's complex, but because it's simple—and almost impossible to execute without the rare combination of patient capital, family control, and the discipline to leave money on the table today to own the table tomorrow.
XI. Bear vs. Bull Case & Future Outlook
Bull Case: The Runway Remains Endless
Start with the total addressable market. The commercial aerospace aftermarket alone is worth $100 billion annually and growing 5% per year. HEICO's current share? Perhaps 5%. Even capturing another 5% would double the company. The math is inescapable: thousands of aircraft flying longer, maintenance costs rising, airlines desperate for alternatives to OEM pricing.
The PMA penetration story has barely begun. Of roughly 2 million parts on a commercial aircraft, HEICO makes 12,000—just 0.6%. Each new PMA approval opens not just one revenue stream but dozens, as the same part appears across multiple aircraft models and generations. The compound effect is staggering: today's investment in a single PMA becomes tomorrow's annuity stream lasting decades.
Airlines' desperation for cost savings intensifies with each crisis. Fuel price spikes, pandemic groundings, economic recessions—each shock makes HEICO's value proposition more compelling. When United Airlines needs to cut maintenance costs by 20%, they don't negotiate with GE; they call HEICO. This dynamic is structural, not cyclical.
Defense and space growth adds another dimension. Defense budgets are rising globally. Space commercialization is accelerating. Electronic warfare is becoming central to military strategy. HEICO's Electronic Technologies Group is perfectly positioned—high-margin, mission-critical components that customers won't risk changing. Defense contracts, once won, last decades.
The acquisition pipeline appears infinite. Aerospace remains fragmented with thousands of small, specialized manufacturers. Private equity owners need exits. Founders want succession solutions. HEICO's reputation as the "good buyer" means they see deals competitors never do. At 3-5 acquisitions per year, they could maintain this pace for decades without exhausting opportunities.
Family alignment extends beyond the current generation. David Mendelson, representing the third generation, already works in the business. The family's 16% ownership, worth over $6 billion, ensures skin in the game for generations. Unlike founder-led companies that face succession cliffs, HEICO has built institutional continuity.
The balance sheet provides unlimited flexibility. With net debt/EBITDA at 2.0x and cash generation exceeding $700 million annually, HEICO could fund another Wencor-sized acquisition tomorrow. They won't—discipline matters more than growth—but the capacity exists for transformational moves when opportunities arise.
Bear Case: The Clouds Gathering
OEM pushback is intensifying. Boeing and Airbus are increasingly mandating single-source suppliers for new platforms. GE's new LEAP engines have architectural designs that make PMA reverse-engineering significantly harder. The easy wins—simple mechanical parts—are already taken. What remains requires exponentially more investment for marginally less return.
New aircraft technology threatens the entire model. Electric vertical takeoff aircraft don't need jet engine parts. Hydrogen propulsion would obsolete HEICO's entire combustion-related portfolio. Additive manufacturing enables airlines to 3D-print simple parts on-site. These aren't immediate threats, but they're visible on the horizon.
Regulatory changes could cripple the business overnight. A single FAA ruling tightening PMA requirements could freeze HEICO's growth. International aviation authorities might stop recognizing FAA approvals. Political pressure from OEMs could result in legislation limiting aftermarket competition. When your entire business depends on regulatory arbitrage, regulatory risk is existential.
Valuation concerns are legitimate. At 76x trailing earnings, HEICO trades at twice the aerospace sector average. The stock has risen 60% in the past year alone. Any disappointment—a failed acquisition, a product recall, a quarter of weak organic growth—could trigger a significant correction. Trees don't grow to the sky, even in aerospace.
Succession risk extends beyond the obvious. Yes, the next generation is prepared. But can they maintain the culture? Will they show the same discipline on acquisitions? Can they preserve the delicate balance between autonomy and control? Family businesses often fail in the third generation, when founders' grandchildren lack the hunger that built the empire.
Competition is evolving. TransDigm continues rolling up aerospace assets with unlimited private equity backing. Chinese manufacturers are developing their own PMA capabilities. Airlines are consolidating, increasing their negotiating power. HEICO's moat is wide but not infinitely so.
The Probability-Weighted Outlook
The next decade likely brings continued but decelerating growth. 15% annual returns seem achievable—below historical rates but still exceptional. HEICO will probably reach $10 billion in revenue by 2030, driven equally by organic growth and acquisitions. The stock will likely experience at least one 30% drawdown as valuations normalize, creating opportunity for patient investors.
The key variables to watch: PMA approval rates (leading indicator of organic growth), acquisition multiples paid (discipline indicator), and third-generation involvement (succession health). If PMA approvals accelerate, if acquisition multiples stay below 10x EBITDA, if David Mendelson and his generation engage deeply—the bull case dominates.
The existential question isn't whether HEICO can grow—it's whether they can maintain their culture while growing. Every acquisition dilutes the founding DNA. Every new employee who wasn't there in 1990 lacks the foundational mythology. Every quarter as a $40 billion company makes it harder to think like a $25 million startup.
But betting against the Mendelsons has been a losing proposition for 34 years. They've navigated every crisis, adapted to every change, and emerged stronger each time. The bear case is real, but it's been real since 1990. Meanwhile, the bulls have compounded their wealth 400-fold.
The future belongs to companies that can balance seemingly incompatible traits: global scale with local autonomy, public ownership with family control, aggressive growth with conservative finances, premium valuations with sustainable returns. HEICO has proven this balance possible. Whether it's sustainable for another generation remains the $40 billion question.
XII. Epilogue: What Would You Do?
Imagine you're sitting in Laurans Mendelson's office, looking out at the Florida humidity shimmering off the tarmac at Fort Lauderdale airport. You're 86 years old, your company is worth $40 billion, and your two sons just officially took over as co-CEOs. The question that keeps you awake isn't what you've built—it's what comes next.
The Sustainability Paradox
HEICO's model contains the seeds of its own disruption. By showing the world that aerospace aftermarket parts can be produced at 50% of OEM prices while maintaining identical quality, they've educated every private equity firm, every ambitious entrepreneur, every airline executive about the opportunity. The very success that made HEICO invulnerable might make the industry vulnerable.
Yet sustainability might come from an unexpected source: restraint. By deliberately underpricing, HEICO keeps the market just unprofitable enough to deter new entrants. It's like Amazon's legendary ability to operate at break-even—competitors see the revenue but not the profits, the work but not the reward.
International Expansion: The Untapped Continent
HEICO generates most revenue from North American and European carriers. Meanwhile, Asia-Pacific aviation is growing at twice the global rate. Chinese airlines will add 8,000 aircraft over the next 20 years. Indian carriers are expanding 15% annually. Southeast Asian low-cost carriers are proliferating.
But international expansion isn't just about selling more parts. It's about navigating different regulatory regimes, building relationships in relationship-driven cultures, and competing against state-backed enterprises. HEICO could acquire local champions, partner with national carriers, or build greenfield operations. Each path has different risks and rewards.
New Markets: Beyond Traditional Aviation
Urban Air Mobility (UAM) represents a $1 trillion market by 2040—if it happens. Electric vertical takeoff aircraft need different components than traditional planes: battery management systems, electric motors, fly-by-wire controls. HEICO could leverage its electronics expertise to dominate this nascent market. Or it could be a spectacular waste of capital on technology that never scales.
Space commercialization is accelerating. SpaceX launches more often than NASA ever did. Satellite constellations need thousands of components. Space tourism requires human-rated life support systems. HEICO's Electronic Technologies Group already supplies space applications. The question is whether to double down or stay disciplined.
Defense transformation offers another avenue. Drone swarms, hypersonic missiles, directed energy weapons—the future of warfare looks nothing like the past. HEICO could pivot toward these emerging technologies or focus on the conventional systems that will remain relevant for decades.
The Next 30 Years: Can They 100x Again?
From $25 million to $40 billion is a 1,600x increase. Another 100x would make HEICO a $4 trillion company—larger than Apple today. It sounds impossible until you remember that Apple was worth $40 billion in 2005.
The math of compounding suggests it's possible. At 15% annual growth—below their historical rate—HEICO would be worth $2.6 trillion by 2054. But this assumes aerospace remains relevant, PMA regulations stay favorable, and family ownership continues. It assumes no black swans, no technological disruptions, no management mistakes.
More likely, HEICO becomes something different. Perhaps they dividend out excess cash, becoming a cash cow for the Mendelson family's next ventures. Perhaps they split into multiple companies, each focused on different markets. Perhaps they go private, escaping public market pressures to focus on century-long planning.
The Ultimate Question
What would you do? You have $40 billion in market value, $700 million in annual cash flow, a reputation as the best acquirer in aerospace, and a management team that thinks in decades. Do you:
Accelerate into new markets, risking the discipline that got you here? Stay the course, accepting slower growth but maintaining your culture? Return capital to shareholders, acknowledging that the best opportunities are behind you? Transform into something entirely different, like Berkshire's evolution from textiles to insurance to conglomerate?
The answer depends on what you're optimizing for. If it's wealth maximization, you probably lever up and buy everything in sight. If it's legacy preservation, you stay disciplined and compound slowly. If it's family harmony, you maintain the status quo and avoid hard decisions.
Final Reflections
HEICO's story isn't really about aerospace parts. It's about proving that families can run public companies better than professional managers. It's about showing that leaving money on the table creates more value than extracting every dollar. It's about demonstrating that patience and discipline compound into fortunes.
Most importantly, it's about alignment. When owners, managers, employees, customers, and suppliers all win together, the resulting business becomes nearly indestructible. HEICO has spent 34 years aligning interests. The next 34 years will test whether those alignments hold when the founders are gone, the industry transforms, and the world changes in ways we can't imagine.
The Mendelsons would probably say that's exactly the point. They didn't build HEICO to last 30 years—they built it to last forever. Whether forever is possible in business remains to be seen. But if any company can achieve it, it might be the one that started with three people agreeing to agree, and never stopped.
What would you do? The question isn't hypothetical. Every investor faces the same choice: chase growth or preserve capital, take risks or maintain discipline, think in quarters or generations. HEICO's answer has created $40 billion in value.
Your answer will determine your own.
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