Ulysses Bridgeman Jr., president of Louisville, Kentucky-based Manna Inc. (No. 11 on the BE INDUSTRIAL/SERVICE 100 list with $475 million in revenues), was one of the CEOs that went on a buying binge. Revenues grew 72% on the heels of the quick-service restaurant owner’s acquisition of some 75 Chili’s stores. Manna now owns and operates 161 Wendy’s Old Fashioned Hamburger restaurants in five states and 105 Chili’s restaurants in seven states.
The move was part of a growth strategy that Bridgeman, 54, and his executive team crafted three years ago. “We started the company on the fast-food side. But looking at trends in the industry and in order for diversification, we felt moving into casual dining would make sense for the growth of the company,” he explains.
Going forward, Bridgeman plans to scale back on new store development and beef up operations to make them more effective and efficient. “With a softening on the commercial side there may be some opportunities ahead, and now may be the time for some land acquisition,” he says.
On the other side of the M&A coin, several CEOs have executed exit strategies. As a result, their companies will no longer rank among the BE 100s. Among them is RS Information Systems, BE’s 2007 Industrial/Service Company of the Year. CEO Rodney Hunt sold the company to Wyle, a privately held provider of high-tech aerospace engineering, testing, and research services. (Financial terms of the deal have not been disclosed.) Others firms that no longer have black ownership status include IT firms Paradigm Holdings Inc. (No. 67 on the 2007 list) and Advanced Concepts Inc. (No. 82).
Another big deal comes from serial entrepreneur Robert L. Johnson. The CEO of RLJ Development L.L.C. (No. 5 on the BE INDUSTRIAL/SERVICE 100 list with $704.3 million in revenues) sold a portfolio of 22 full- and select-service hotels to Inland American Lodging Corp. for approximately $900 million, with an estimated net profit of $300 million. Part of RLJ’s investment strategy was to renovate a number of hotels, change management companies, and create incremental value to the portfolio. Earlier this year the Bethesda, Maryland company also closed out its third private equity fund, the RLJ Real Estate Fund III, with $1.2 billion in assets. Revenues for RLJ grew an impressive 53%.
DIVERSITY AT PLAY
One winning strategy employed by BE 100s CEOs was to identify new revenue streams and seek new business opportunities outside of sluggish industries. Joseph B. Anderson Jr., chairman and CEO of TAG Holdings L.L.C. in Troy, Michigan (No. 6 on the BE INDUSTRIAL/ SERVICE 100 list with $605 million in revenues), was one of them, having made the call to pursue non-Detroit-based automotive companies as they gained market share in the U.S. And for his efforts, revenues for the automotive component supplier climbed 49%. “For each new opportunity I have launched a new company,” he adds, noting that he has not allowed the overall enterprise to be subject to failure or losses at any one plant. So, for example, “if a product