RMS strikes deal for growth capital: but will move shift power at New Jersey company.

RMS Technologies Inc., the Marlton, N.J.-based information and technology company (No. 6 on the 1995 BE INDUSTRIAL/SERVICE 100) recently announced a deal with the Safeguard Group that will provide RMS with an undisclosed amount of capital.

But while the deal will fund the recapitalization of RMS--which sells computer and technical services to the government--it also opens the door for a nonminority to acquire a significant amount of the company's shares.

The Safeguard Group, a Wayne, Pa., company composed of Technology Leaders Ventures, Safeguard Scientifics Inc. and CMS, has invested in several companies in the past, including Cambridge Technology. "Cambridge Technology was worth about $10 million when we came along; today they are worth maybe $300 million, says Ira Lubert, general partner of Technology Leaders." Of course, there is no guarantee that every company will do as well."

The possible growth of RMS sounds exciting, but will it shift the power within the firm? "Our goal is to make this company even more successful than it is today," says Lubert, who is not African American and who now has the option to acquire as much as 49% of RMS shares. "If it is successful, of course, then its value is increased, and that makes purchasing stock even more attractive."

Rotan Lee, chief operating officer of RMS, says the mission will remain the same, regardless of Lubert's decision on acquiring the company's stock. "[African American] ownership and control has not changed."

RMS has a solid niche in the marketplace. Safeguard's backing will provide RMS with the capital it needs to continue to grow. RMS reported $121 million in revenues in 1995, up from the $115 million reported the previous year.

"This is a major move. Minority businesses, in an effort to become competitive [and] grow adequately, must have adequate financing," Lee says. "This was a step that was designed as part of a growth pattern."

David Huggins, chairman and founder of RMS, adds: "RMS Technologies has grown steadily over the years, building an excellent reputation and business base. The Safeguard partnership is the next logical step in the company's growth."

As RMS grows, it plans to offer shareholders and then the public a chance to buy in. "There will be a public offering in the next two years," Lee says. "We want to raise sufficient capital to underwrite growth to the company as we take the next step. With the right moves and with its new relationship with Safeguard, Lee says he believes RMS could become a billion dollar company within the decade.

All three of the companies in the Safeguard Group will participate on RMS' board of directors, providing advice and marketing experience. "This strategic alliance is more than a financial relationship," says Lee, who describes the joint venture as an "interdependent network."

RMS officials cite four goals in their five-year growth plan. They comprise expanding their base of business; expanding their presence in the federal marketplace; segueing into the commercial marketplace; and facilitating a public offering.