The Image of Success At 34, John Meindl has built GeneSys Data Technologies into a $30 million optical imaging company. Now, he's eyeing a deal that would triple the company's size.

May 20, 1991|By Leslie Cauley

John Meindl didn't write the book on management by crisis, but he could no doubt pen a few chapters.

The 34-year-old chief executive of GeneSys Data Technologies has been dealing with a series of near-misses, long-shot gambles and close calls since the day he decided to dive into the high-stakes world of optical imaging.

Now that the Hunt Valley-based company is a $30 million-a-year enterprise -- and growing -- Mr. Meindl makes it clear he's ready to test fate again. On the table this go-round: A chance to buy a $75 million-a-year sister company in Australia, Hermes Precisa.

"We could stay where we are and make a couple million dollars, live a nice life and in five years sell the business . . . and everybody's fat, dumb and bulletproof," muses Mr. Meindl. "Or you can roll the dice and really try to take this thing up to the next level. Buying Australia will take us up to the next level."

Going Down Under will triple the size of GeneSys overnight. If all goes according to plan, the acquisition could make GeneSys the largest imaging and records management company in the United States.

That's no small feat considering the competition includes such blue-chip names as International Business Machines, Panasonic and Eastman Kodak.

But if the potential rewards are dramatic, so are the risks.

Tripling GeneSys' size means increasing its debt and management burden, too. The acquisition would expand GeneSys' employment roster from 500 to 1,700. Most of those employees would be located in offices halfway around the world.

Nobody really doubts GeneSys has the ability to manage Hermes Precisa. After all, GeneSys has been managing the full-service microfilm company successfully for more than a year for an affiliate company, Omni Holding AG. The $6.5 billion Swiss conglomerate has held a financial stake in GeneSys since 1988, the same year GeneSys was founded.

But it remains to be seen how GeneSys will fare once GeneSys doesn't have the deep pockets and international clout of Omni to fall back on. Omni, which filed for protection from creditors last fall, is in the process of dissolving its relationship with GeneSys.

Then there's the problem of finding the cash to pay for Hermes Precisa.

According to Mr. Meindl, GeneSys is going to have to come up with about $40 million to close the deal -- and it has just one year to do it. Given the general dearth of investment capital these days -- especially for companies engaged in an industry still considered high risk -- that's easier said than done.

That could explain why GeneSys is reviewing other financing options, including some less attractive solutions that might diminish GeneSys' autonomy. Those options include taking on a minority partner or making an initial public offering.

GeneSys has already talked to Alex. Brown & Sons Inc. about a possible stock offering, but Mr. Meindl makes it clear he's in no mood to hand control of the company over to any outsider, including stockholders, if he can avoid it.

So as the clock ticks, the search for outside financing goes on.

If others see risk ahead for GeneSys in the current financing game being played out, Mr. Meindl only seems to see opportunity.

"What an opportunity there is, and what a mistake it would be if we didn't pursue it," says Mr. Meindl, a financier by training but a salesman by instinct. "It would be like [McDonald's founder] Ray Kroc putting up the first McDonald's and then saying, 'OK, what do you want to do here, Ray? Do you want to make some money and sell out [to a buyer] or do you want to take a roll of the dice

and see if you can make it happen?' "

GeneSys' potential market is huge -- and growing still.

U.S. businesses currently generate almost a billion documents a day, a figure that is expected to increase as more businesses computerize their offices -- and begin wrestling with the problem of what to do with all those computer printouts.

The proliferation of paper is forcing management to look beyond traditional means -- namely filing cabinets and boxes in back rooms -- to make sure business documents are kept safe and accessible, said Jim Breuer of the Association of Information and Image Management in Washington.

That presents a prime opportunity for companies like GeneSys, which specialize in building systems that can electronically store documents. Once filed electronically, documents can be retrieved in seconds. And unlike their paper cousins, electronic files don't get lost or misfiled.

The way Mr. Meindl sees it, all that paper translates into market potential for GeneSys. Providing all goes according to plan, he believes GeneSys could grow into a $300 million imaging giant within a few years.

That may seem like a long-shot prospect at this juncture. But, under Mr. Meindl, GeneSys has been rolling the dice -- and beating the odds -- almost since the day it was founded.

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