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Posted on Tue, Jan 4, 2011 : 9:45 a.m.

Promising alternative energy firm Adaptive Materials sold to U.K. company

By Nathan Bomey

Michelle Crumm.JPG

Michelle Crumm co-founded Adaptive Materials with her husband Aaron.

Lon Horwedel |

(This story has been updated several times with additional information.)

Fuel cell maker Adaptive Materials, one of the Ann Arbor region's most promising alternative energy companies, was sold to a United Kingdom-based company in a deal announced early this morning.

U.K.-based Ultra Electronics Holdings plc paid $23 million to acquire Pittsfield Township-based Adaptive Materials from its founders, husband-and-wife Michelle Crumm and Aaron Crumm.

A spokeswoman said the company is expected to maintain its 47,000-square-foot operation just off South State Road in Pittsfield, where the company produces fuel cells and employs between 50 and 60 workers.

Michelle Crumm, the company's chief business officer, could not be reached for comment. Michelle and Aaron are expected to stay with the company.

“Adaptive Materials has always been a privately-held company that has grown steadily through its work in the military space,” Michelle said in a statement. “Acquisition at this time by Ultra Electronics made perfect sense. Together, we can continue to invest in broadening the product portfolio to meet a growing demand from a wide range of customers for Adaptive Materials’ fuel cells.”

The company was founded about 10 years ago as an outgrowth of Aaron Crumm's doctoral project at the University of Michigan. The firm makes fuel cell packs that run on standard propane fuel that can be bought at stores throughout the world.

The technology provides an alternative to heavy battery packs and is considered particularly valuable for the military, whose soldiers need lightweight portable power sources to perform operations in the field.

The military has plunged tens of millions of dollars into the company, including more than $10 million in 2010.

Because of the government funding, Adaptive Materials is the rare example of a startup company that never had to seek or accept funding from outside investors. The company never took venture capital funding, so the outcome of the sale is sure to be very lucrative for the Crumms and the employees of the company, who have shares of their own.

Ultra Electronics is a conglomerate with some 24 companies in 100 markets, including defense, energy and security. Its enterprise value, a measure of its market worth, is $234.39 billion, according to Yahoo! Finance.

Adaptive Materials, in a news release, suggested that the deal would provide financing to continue to expand its fuel cell production capacity and pursue more market opportunities, including commercial applications such as the recreational vehicle market.

“Adaptive Materials is an excellent acquisition for Ultra Electronics, adding to the Group’s range of specialist energy solutions,” said Rakesh Sharma, chief operating officer of Ultra, in a statement. “Adaptive Materials has excellent IP, endorsed by its customers, and will benefit from Ultra’s proven abilities in high quality, volume manufacturing as it enters the production phase for its range of fuel cells. I am confident that Adaptive Materials will continue its track record of innovation under Ultra’s ownership.”

Adaptive Materials is currently seeking to hire about 10 engineers, and those jobs will be filled, the company said.

The firm has experienced overwhelming interest in its jobs in the past. When the company announced in early 2010 that it needed to hire nine engineers as soon as possible, the firm received some 7,100 applications.

Adaptive Materials is one of several companies in the Ann Arbor region that have gotten tax relief from the Michigan Economic Development Corp. in recent years. The firm in 2007 received a 7-year, $871,000 tax credit from MEDC's Michigan Economic Growth Authority board based on a promise to add 100 jobs over that period. The firm also received a 12-year, $41,000 tax abatement from Pittsfield Township.

The company also got a $6.27 million low-cost loan in 2006 from MEDC's 21st Century Jobs Fund. That loan was paid off. In early 2010, the firm received $3 million from the MEDC's Centers of Energy Excellence program, and $1.4 million of that has already been distributed to the company.

Whether Ultra Electronics maintains its promise to keep the company in the Ann Arbor area for the long term is sure to be closely watched.

The region is still bruised from the exodus of U-M medical devices startup HandyLab, whose acquirer, New Jersey-based Becton, Dickinson and Co., is eliminating the company's Pittsfield Township office and moving production of its infection-detection device to the East Coast.

But there are other local examples of acquisitions where the company kept its offices here and decided to grow. Network security firm Arbor Networks was sold in 2010 to Plano, Texas-based Tectronix Communications, which has said it plans to add 30 jobs to Arbor's 90-person Ann Arbor office by the end of 2011.

Also, Ann Arbor software firm HealthMedia, sold to Johnson & Johnson in 2008, is still based here and is gradually adding to its staff.

Contact's Nathan Bomey at (734) 623-2587 or You can also follow him on Twitter or subscribe to's newsletters.



Fri, Jan 7, 2011 : 1:20 a.m.

Congratulations to the Crumms and the Adaptive team! 10 years is a long haul for anyone, and we shouldn't begrudge such folks their success. All of us want to see a strong tech franchises here, to replace our failing old-economy employers. But exits do create opportunities, even if it sometimes seems the opposite. Hopefully Adaptive continues to grow, and its alum go on to start more companies in the area. @Steven - even if the capital markets weren't a mess, it's not clear Adaptive would have been appropriate to IPO. Still, it's interesting to consider what companies are doing outside the US, e.g. on the TSX-V (including investors like Rick Galdi, with his curious public angel fund). What really strikes me is how different the equations are for resource-intensive life science and manufacturing companies vs. ultralight software companies. In the last two months, I've had two friends exit their 2-year old software companies, each under 20 employees, at valuations representing well over $1m per employee - but both also with impressive customer traction, scalable online distribution, and huge margins (software rocks! :-). One bootstrapped while the other took 10x); both direct to consumer, neither leveraging a social graph. This is the typical story for high-growth software startups (Basil Peters has a great take on this phenomenon at ), enough that it's actually derided in the Valley (Mike Arrington's famous quote about "dipsh*t companies wanting to sell to Google for $20m" - no offense to Nathan Stoll here, who sold Aardvark to Google for $50m;-). But they also happen quickly enough that folks get multiple turns at bat - and ultimately, to have the kind of dynamic community other cities enjoy, we need to see more people, learning faster, together, how to build successful companies through experience. ObPitch: As always, all are invited to our monthly Ann Arbor New Tech Meetup where we meet 5 new local early-stage companies every month (80+ presenters since we started, 1300+ members). Or just come drink beer with us at 4:30 every Friday at;-)

Lets Get Real

Wed, Jan 5, 2011 : 5:03 p.m.

Let's Get Real - bigbluebus tells it true - this was Aaron's school project and Michelle, a CPA, used every trick in the book to get YOUR taxpayer money to fund the project on someone else's dime - YOURS. Whether it is your Federal dollars, your State MEDC funds, or your local township tax abatement, it was your money. There was no management experience and the lack of competitent management and leadership was evident. It especially became aparent after the shift from managing purely R&D personnel to also including a manufactuing workforce. They'll walk away with a bundle - good for them - thanks to you. Will any of that money go back to you - or the government entities that helped them succeed? Unlikely. Where is the giveback? Only in strategicly placed alliances, i.e. running a big splashy fund raising party for Red Cross - strategic because Red Cross does emergency communications for the military - get the link? Or, BOD of an entrepreneurial competition - to keep an eye on emerging companies. bigbluebus is right, so much of the inside information is unflattering. It's really too bad that the self designated, self important, self indulgent, self nominated, self appointed face of AMI was more interested in awards, press, and appearances. Lured by the pretense of exclusive clubs, and networks of the wealthy and influential this company USED EVERY contact for personal benefit. Those left in the wake - well let's just say if you weren't useful, it wasn't pretty. When a corporate leadership team instills process and procedures, it will be interesting to see how long being accountable to someone else will sit well. Nathan's note: "Michelle Crumm will leave the company within a year." With $25 million to spend? Not likely she'll last that long. Let's Get real, this is Hurray for tech transfer, Hurray for Aaron's brilliant idea. Hurray for a Michigan success story. But, did the end justify the means? You decide.

Nathan Bomey

Wed, Jan 5, 2011 : 3:15 p.m.

Here's my follow-up story in case you missed it: Note that Michelle Crumm is leaving the company within a year.


Tue, Jan 4, 2011 : 11:18 p.m.

Congratulations to Nathan. This may be the first article written aboubt this 10-year old venture that did not use the phrase "start-up" in referring to Adaptive. Yet, another glowing article about our local pride & joy. My heartache is this: If you know anything about this company, you know it is one of the most poorly run small companies in the area. You would not find this out from any current employees, as they would be afraid to say anyting about the Crumms out of fear, even off the record. The list of talented people who have left or been let go continues to grow. I now know four of them personally. So I wish just one article would be written critically (objectively) examining the 10-year history of Adapative, what the return has been for tens of millions of public money invested in it, and how it has charted its course to this point. Let's call it case study. My hope is this: That the new owners purchased ALL of the assets of Adaptive (including 100% of the IP), that they take over the reigns of the company and run it, keep the Crumms on only temporarily and only in an advisory capacity, and keep and GROW the workforce here in Washtenaw County.

Stephen Lange Ranzini

Tue, Jan 4, 2011 : 5:55 p.m.

As a bank president who has overseen $275 million in venture capital investments in my 22 year career I do think that there is a problem here when our most promising firms sell out and relocate elsewhere. The problem I see is not with the Crumms at all, but with the system itself which is staked against the best outcome for Ann Arbor and Michigan in general. The Crumms have a very successful business and to take it to the next level, it does make more sense for them to sell out rather than going public and raising the money they need to expand their product into new markets. Remember that if they bring in venture capitalists, they would likely lose management control of their firm, while going public usually doesnt have that downside risk. Unfortunately, Michigan is the Sahara of Venture Capital and on top of that, Michigan doesnt even have an investment bank based here anymore, so there is insufficient private equity capital to help people like the Crumms move their company ahead. In the past, when there was a good business idea searching for capital, the backers were sent to Wall Street where after much back-room deal-making the money was raised (just as the money was raised to build many of the U.S. railroads, leading manufacturers, and communications firms like cable TV and cell phone companies). Unfortunately, the geniuses on Wall Street decided a number of years ago that slicing, dicing and buying pieces of debt paper with massive leverage was a more profitable activity than raising the capital to build up good businesses (a/k/a making money the old fashioned way). That is a major reason why our country has not grown any new jobs for the past decade. If the giant Wall Street investment banks had failed - which they would have without the multi-trillion dollar bailouts new and local investment banks would have sprung up to fill the void, and wed all be better off. In addition, due to the cost of being public, thanks mainly to the poorly drafted Sarbanes-Oxley Law which made the cost of having annual audited financial statements sky-high and the lack of regulation of the Stock Exchanges, who hiked their fees for being listed on them 10 fold, it is nearly impossible to be a small stock exchange listed firm, and so the investment banks that catered to that business were forced out of the business. It used to cost my bank $40,000 a year to be listed on the Nasdaq Stock Market. When the cost of being a public company reached $250,000 a year, we dropped the listing. We were doing it with a lot of in-house resources but the cost for many others is at least double that crazy cost. If the cost of being a public listed company were lowered substantially, we could again see money being raised to build new businesses from the ground up. Perhaps one day, people like the Crumms can get $25 million in an IPO instead of $23 million from a private sale of their firm. If they could get that money locally, they wouldnt need to sell out. Everyone would win.

Nathan Bomey

Tue, Jan 4, 2011 : 11:19 a.m.

@nekm1 I'm meeting with executives late this afternoon, and I'll press them to discuss their commitment to the area.


Tue, Jan 4, 2011 : 11:19 a.m.

Primarily for Mr.Martel however this should be known by ALL. Arbor Technologies USED to exist at 401 Morgan Road, at State Street, formed by former Gelman Executives. Whatman, a UK company bought it out in 198/1999. At the EXACT same time the 9/11 Terrorist attacks where happening, we were all told that our jobs where on the line. Within 2 yrs, the facility was shut down, manufacturing was moved overseas primarily, a few scant projects sent to the East Coast. All 150-200 workers were left without jobs and are Displaced Workers under NAFTA. Its just not about leaving TOWN its about it getting sucked up and sent overseas. Eventually Whatman became a part of GE Healthcare, would have been nice to have that business continuing to flow out of Ann Arbor.


Tue, Jan 4, 2011 : 11:14 a.m.

The firm has landed government awards worth more than $10.9 million. Plus $3 million recently from the Michigan EDC. Are the taxpayers going to be able to get some of their money back?


Tue, Jan 4, 2011 : 11:09 a.m.

So, how much did we taxpayers pay in to fund a private venture? Also, why is the writer so excited about a company with government vs local venture capital funding? Last time I checked, local venture money paid local salaries! The military has plunged tens of millions of dollars into the company, including more than $10 million in 2010. Because of the government funding, Adaptive Materials is the rare example of a startup company that never had to seek or accept funding from outside investors. The company never took venture capital funding, so the outcome of the sale is sure to be very lucrative for the Crumms and the employees of the company, who have shares of their own.


Tue, Jan 4, 2011 : 11:02 a.m.

And so will the exit of A2 developed technolgoy and firms continue... A true shame that there were no buyers intent on keeping the firm in Michigan.

Jen Baird

Tue, Jan 4, 2011 : 10:43 a.m.

Great news! Exciting to have the validation of an acquisition on the future potential of this company! Congrats to Adaptive Materials! (I am also hopeful that the UK labor laws will incline the acquiror to leaving Adaptive intact in Ann Arbor, but even if they don't, what Javajolt1 said is true. Build more companies. Grow and prosper. Don't get stuck in a point in time.)

Bob Martel

Tue, Jan 4, 2011 : 10:41 a.m.

@Javajolt1, I think that we tend to be cynical about the phenomena of a company leaving town soon after being acquired since it seems to happen so often to our most successful start-ups. Certainly no rational person would begrudge any company's right to leave town, but if we are to grow our economy we need to keep a greater share of these success stories. I've been in this town for over thirty years and am amazed at how few big national employers we have compared to other research/start-up oriented communities (think of Research Triangle Park in NC as the ultimate example.) Rather than carp about this phenomena, I'd rather see our community leadership find ways to keep these companies around. I've not seen any data on this so I can't be sure what the answer is, it may be taxes, but I doubt that simply being a low tax or low regulatory zone is the answer to everything because, if it was, Silicon Valley would be in Mississippi or Arkansas and not in the ridiculously high-tax and high-regulation California and Route 128 wouldn't be in the similarly high tax Massachusetts (or Taxachussets as I heard it described by the locals!) So, my comment is simply let's figure out what it takes to keep more of these successful companies in our area and just do it!


Tue, Jan 4, 2011 : 10:27 a.m.

This is a success story. 10 years of hard work pays off. Where is it written that a company created here must remain here? Companies come and companies go. The fact this isn't a story about a company going 'belly-up' is a huge positive. If the nay-sayers are saying companies should remain here simply because they started here, that's absurd. When this state creates a more competitive business environment (which it hopefully will), companies will not only stay here, they will move here. Good for Adaptive Materials. Proving once again, there is nothing broken with entrepreneurship around here.

Bob Martel

Tue, Jan 4, 2011 : 10:26 a.m.

Good for the owners, I'm sure that they received a well deserved payout for a lot of sacrifice, hard work and risk. Now, let's sit back and see if our cynical assumptions about corporate relocation come to pass.

Lisa Kurek

Tue, Jan 4, 2011 : 10:11 a.m.

Congratulations to Adaptive Materials! This is an excellent example of what our community can build. Note that it took time - 10 years. Building successful tech companies is not a short term process. But it was done here in Ann Arbor with local resources and exceptionally smart use of federal funding. The fact that a UK company is the acquirer means that Ann Arbor has global reach and visibility. And in our global economy this is a great accomplishment.


Tue, Jan 4, 2011 : 10:10 a.m.

And now we wait to find out whether the move will be to Texas or to New York....and how long it will take to happen.

Go Blue

Tue, Jan 4, 2011 : 10:04 a.m.

Typical - money talks, loyalty walks. Nice - take what you can get to build your own coffers from anything local then sell to a foreign country to make a buck.