Evaluation Research Corp. of Vienna is equipping itself for a future that it hopes will involve growth by acquisition and that it fears will require the tools to thwart takeover attempts.
Both possibilities were on the minds of management when it decided to change ERC from a corporation based in Virginia to a holding company based in Delaware, ERC President Jack Aalseth said yesterday. That change becomes effective Feb. 1 when ERC converts its stock to ERC International Inc., the name of the holding company.
Moving its "domicile" from Virginia to Delaware, Aalseth declared, will make it easier for ERC to develop antitakeover strategies, called "shark repellents." Virginia law requires a two-thirds vote of all shares to adopt antitakeover devices such as two classes of stock, a common "shark repellent." Delaware law, however, requires only majority approval, he said.
While service companies such as ERC are not normally takeover targets, Aalseth noted, ERC's cash-rich position could prove tempting. ERC, he said, has about $3.5 million in surplus cash and a $7 million line of credit.
ERC management ran into the two-thirds rule at its 1984 annual meeting when it sought approval for the Delaware holding company and authorization to issue preferred stock. Only 72 percent of the shares were voted. The holding company was approved, but the preferred stock plan was defeated.
Creation of the holding company, Aalseth said, will make it simpler for ERC to grow by acquisition or from within. "It is the preferred management structure for growth," he said.
With the conversion of the stock, the present ERC will become a wholly owned subsidiary of the holding company, as will the other ERC companies, Electromagnetic Technology (EMT), Analytic Disciplines (ADI), Intercad Corp., Logistics Operations (LOI), and EVAK Systems (U.S.) Inc.
ERC, which employs 650 people, provides engineering, computer and management services to government and private industry. The company reported revenue of $29 million in 1983 and $24 million for the first nine months of 1984.
Aalseth said that ERC concern about a takeover was not directed at any specific group or individual. However, Aalseth and ERC management began thinking about outsider interest in their company last fall when Alan S. Parsow, of Elkhorn, Neb., began buying large blocks of stock in Evaluation Research. Parsow later asked for a seat on the board of directors. Parsow, who operates a $23 million Nebraska limited partnership investment fund, now owns 8.5 percent of ERC stock, or about 253,000 shares.