Critical mass: when Dimensions International acquired fellow BE 100s firm SENTEL Corp., it created a new force in the homeland security sector

High above the court at Washington, D.C.'s MCI Center, Russell Wright watches the action as the playoff-hopeful Wizards square off against the Atlanta Hawks. From an apartment-sized executive suite, replete with a fully stocked bar and buffet table, Wright's eyes are on the game, but his mind is focused on business.

The crowd roars as the heavily favored home team goes on a scoring run, led by guard Gilbert Arenas, but "Wright is making phone calls, gathering his thoughts. The 37-year-old chairman and CEO of Dimensions International Inc., the Alexandria,. Virginia-based technical services dynamo, recently spearheaded the largest deal in the history of his firm. Acquiring SENTEL Corp., a former BE 100s company that provides engineering and software services, moved DI into one of the sweet spots in the government services sector. This provider of telecommunications, logistics, information technology, systems integration, engineering, and test evaluation services to Uncle Sam has now grown large enough to handle bundled contracts: the consolidation of two or more requirements for supplies or services into a single contract. In the past, such opportunities would have been too large for a firm DI's size to handle. Not anymore.

The deal is not without its share of risk. SENTEL was nearly 80% of the size of DI--a large acquisition funded with some $30 million borrowed from Bank of America. But the incorporation of SENTEL's operations is going smoothly, and acquisition-related debt is being paid down ahead of schedule. In fact, not one to rest on his laurels, Wright is looking at another acquisition-another government IT services firm with as much as $25 million in revenues.

Some three years ago, Dr. Robert L. Wright, who founded DI in 1985, handed the reins over to his son. Eager to make his own imprint on the company, the younger Wright orchestrated one of the larger black-on-black acquisitions in recent history with the SENTEL deal. He did it by surrounding himself with the right people to hammer out the deal, secure the necessary financing, and successfully integrate operations. Growth is the name of the game in the red-hot government IT services sector, and Wright has positioned DI to expand tight along with it, gaining the critical mass needed to attract bigger and better contracts.

Instead of going it alone and taking a sliver of the government contracting pie, DI represents the emergence of a new BE 100s business model in which revenue expansion and market-share growth is a byproduct of joint ventures and strategic acquisitions between black-owned firms. By achieving economies of scale, increasing capabilities, and bolstering product offerings, DI has been transformed into a tech powerhouse that grossed $98.62 million in sales in 2004, earning the company the No. 35 rank on this year's RE INDUSTRIAL/SERVICE 100 list. Due to its position as an industry trailblazer and viable force in the business mainstream, BLACK ENTERPRISE has named DI its 2005 Company of the Year.

With the increase in government spending for homeland security and continued military action overseas, the federal IT services market has grown into a $50 billion-plus annual business. "Ever since the bursting of the dot-com bubble where the commercial sector simmered down, the government space has been viewed as attractive from a growth standpoint," says John C. Allen, co-head of the defense and government services group for BB&T Capital Markets/Windsor Group, a fleston, Virginia-based investment banking firm. "It's a hot spot right now, but even in times when other market segments are [more] attractive, it's still a growth market. It's just that it gets a little less attention than the hotter markets."

These factors have caused Wright's firm to heat up as well. "As bad as it sounds, we're in the fighting business," the soft-spoken younger Wright says with a hint of a Georgia accent. "We're in defending our borders. When the military occupies other countries, we go right along with them."

DI is perhaps best known for its Flight Explorer subsidiary. After the 9-11 attacks, Flight Explorer, an Internet-based, real time global tracking system, was used by the government to track commercial aircraft and was the predominant flight-tracking technology used by news agencies. Flight Explorer's products and services generated $4.4 million in sales in 2004, and the system has some 5,000 subscribers. The product can be seen regularly on CNN when the network's air traffic specialist, Bally Caparas, delivers his flight and airport delay reports.

ART OF THE DEAL

The SENTEL deal made sense on several levels. SENTEL, an engineering and software company that ranked No. 73 on last year's BE INDUSTRIAL/SERVICE 100 list with $43 million in sales, had contracts with such agencies as the Department of Defense, NASA, and the Federal Aviation Administration. Its technology is used to guard military bases, government buildings, stadiums, subways, bridges, and tunnels. The firm had established itself as a leading provider of homeland security with its Remote Data Relay system, used primarily by the U.S. military. RDR provides a remote perimeter of defense in areas where there might be a threat of chemical and biological attacks. The wide-area network integration system lets users control the detection of up to 400 sensors from one single command site to reduce the need to send soldiers and citizens into harm's way.