Further outside the box
SAN ANTONIO--MDI, traditionally an access control manufacturer, has over the past year launched a systems integration arm, Global Support Systems, and has now supplemented those abilities with the purchase of FAS Construction Management for five million MDI shares.
MDI's focus over the past year has been upon its LearnSafe initiative, which offers schools a "soup to nuts" security package, with everything from background checks to cameras. "One of the big items we knew we were short on," said MDI chief executive officer J. Collier Sparks, "was getting in on the very beginning of school projects when they're doing their site surveys and initial planning. FAS has a web of consulting architects and engineers in all 48 [contiguous] states and Mexico."
While Sparks said MDI isn't trying to compete with risk management and assessment firms like Kroll, "if a client chooses one of the Safe Initiatives [there is also WorkSafe and PlaySafe], we can fill the void."
Plus, it's a profitable company, and MDI, which has lost more than $4 million in cash flow over the last 12 months, on just over $7 million in revenues, could use the positive cash flow.
For FAS's part, president Bill Wurzbach said he had been considering taking his company public, and by effectively merging with MDI, he now has access to capital like a public company, but didn't have to go through the expense of hiring the staff necessary to fulfill public-company reporting requirements, for example. "It's an existing operation with people in place to deal with some of those headaches," Wurzbach said.
Though the deal was announced as a $10 million transaction, with MDI shares valued at $2 each, MDI stock hasn't traded that high since May of 2007, and was trading around $.70 in early November. Sparks said the numbers are immaterial to the deal: "It wouldn't matter what the price was ... The owners of FAS are very excited about the opportunity and they're not going to be passive shareholders."