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 Reston, 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, Rally 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.
SENTEL’s technological capabilities fit snuggly with DI’s homeland security products and services. But the two companies almost didn’t get hitched. “I put SENTEL on the market and had a broker firm and shopped around. We had other offers, and [DI] was very competitive in their offer,” recalls former SENTEL CEO James Garrett. “I was looking to sell the company and merge with another company. I wanted a culture that fit in with SENTEL’s and would allow SENTEL to continue to operate as it always has.”
Wright learned that SENTEL was looking to sell in August 2003 and was interested, very interested. But to pull off this deal, the young CEO needed cash — loads of it. “I wanted to give DI a jump-start,” says Wright. “I wanted to make a splash and begin to create my own reputation