Building New Foundations

Building New Foundations

Many of America’s black CEOs took a wallop in 2007 but carried on their fight for survival in an unrelenting economic environment. In times like these, chief executives must grow their enterprises through strategic leadership and innovation. They demonstrated this through buying and selling operations, seeking synergistic business opportunities, and sometimes opting out of less profitable opportunities — in essence, by making the tough calls.

And it was necessary. For the year, the economy advanced an anemic 2.2%, the weakest performance in five years. Consumer spending grew 5.5%, the weakest growth since 2003. Gross domestic product expanded at an inflation-adjusted 2.2% rate compared to an increased 2.9% in 2006. Depressed housing markets, with foreclosures hitting a record high, and harder-to-get bank credit were contributing factors.

Against a backdrop of the subprime lending fiasco, pre-recession jitters, and faltering consumer confidence, many BE 100s CEOs have restructured operations and even become more acquisitive. Others have taken profits and cashed out to begin new ventures or simply enjoy the wealth they’ve accumulated.

Overall, BE INDUSTRIAL/SERVICE 100 firms posted a 9.8% gain in revenues with essentially the same number of employees. Those that were able to either hold their ground or advance their businesses were those firms with chief executives who employed innovative strategies to capture market share, enter new markets, and acquire or sell off assets depending on market conditions.

The 2007 acquisition of Dimensions International (which ranked No. 24 in 2007) by Honeywell International led to the return of SENTEL Corp., a wholly owned subsidiary of WC Holding Inc. and a former BE 100s company. SENTEL (No. 90 on the BE INDUSTRIAL/SERVICE 100 list with $45 million in revenues) was acquired by Dimensions in 2004 and spun off last year prior to the Honeywell-Dimensions deal. The engineering service firm is now a 50-50 partnership between Russell Wright, former CEO of Dimensions, and Darrell L. Crapps, who served as Dimensions’ executive vice president and general counsel.

Wright felt it was the right time to sell. “Government contracting and logistics and what we do are just sexy,” Wright says. “It’s not that I’m ready to stop work. It’s not that I want to go ride off into the sunset. It was just too big of an opportunity to pass up. To be able to be part of another company moving forward and still have the DI logistics segment stay together — under my direction, just under a bigger company — is just fantastic. It’s a dream.”

It’s less than a year after the transaction, and SENTEL based in Alexandria,Virginia, is already looking acquisitive. “We’re looking at the marketplace to see what makes sense from a synergistic and valuation perspective, but we’re also interested in pursuing things that we’re interested in,” says Crapps. “I mean, we have been in the government contracting business for a considerable amount of time now.” Crapps projects SENTEL will generate $54 million for 2008 and says a planned acquisition, the details of which he couldn’t speak on yet, would propel sales to as much as $70