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DMS projecting growth, more jobs after becoming a public company

Margie Manning



DMS would trade on the New York Stock Exchange as part of the $757 million deal.

Digital Media Solutions expects to hire legal, financial and investor relations experts, as the Clearwater digital marketing firm prepares to become a publicly traded company.

The company has signed a term sheet with Leo Holdings Corp. (NYSE: LHC) and is working on a definitive agreement that would lead to Digital Media Solutions being listed on the New York Stock Exchange under the ticker “DMS”. The deal is valued at about $757 million.

DMS  is currently one of the largest privately held businesses in the area, with 14 offices across the United States and $156.2 million in 2018 revenue. It’s projecting revenue growth of more than 30 percent this year.

The company has marketing tools that it says connect the right consumers with the right offers at the right time to achieve the marketing objectives of its clients. It has grown as traditional offline advertising has shifted to online advertising and marketing. It’s also bought up smaller firms to add to its own capabilities.

“We’ve done quite a few acquisitions over the years. Being public will give us more capital and allow us to leverage our stock as a currency in future transactions that seem promising. Overall, we view it as a lever to help continue to drive growth in the business,” Joe Marinucci, co-founder and CEO.

The planned deal also is exciting for employees, he said.

“There’s advantages to being a public company in terms of how the employees are rewarded in the form of having access to the stock,” Marinucci said.

The company has not yet determined the specifics of any stock employee plans, he said.

DMS has been preparing to become public-traded for a while. Private equity management fund Clairvest Group Inc. (TSX: CVG) owns 46 percent of DMS and has two seats on the DMS board of directors.

“The amount of oversight and discipline that we currently run the business with has set us up to be well-equipped to be a publicly traded company,” Marinucci said.

DMS has been working with Bank of America Merrill Lynch on strategic options. When DMS made the decision to explore public market opportunities, bank advisors suggested looking at a special purpose acquisition company as the most viable path, Marinucci said.

Leo fits that description. Leo was established in 2018 as a “blank check” company, set up specifically to acquire another firm. Last April, Leo had a deal to buy Queso Holdings, the parent company of Chuck E. Cheese, but Queso withdrew from that agreement in late July.

In August, a DMS executive who Marinucci said was unaware of the company’s plans to pursue a public listing by chance introduced the company to Lori Bush. Bush is the former president and CEO of skincare company Rodan + Fields, and currently serves on the board of Leo Holdings.

“We really liked [Leo Holdings’] experience in the advertising and marketing space. They had an affiliation with Lion Capital and Lion has deep experience in working with a number of different brands. They were early with Jimmy Choo and some other investments where they’ve done a really good job of helping companies build through a variety of cycles,” Marinucci said. “They have a really talented board. One of the members of the Lion Capital board who’s attached to Leo is Mary Minnick, who was a very senior executive Coca-Cola and currently sits on the board of Target.”

Lyndon Lea, a  founding partner and managing partner of Lion Capital, also is chairman and CEO of Leo Holdings.

Both DMS and Lion Capital have a social impact focus. Lion Capital has signed six United Nations-supported principles for responsible investment, and Lea is a strong supporter of Not For Sale, a charity dedicated to the abolition of modern-day slavery.

DMS has its own social responsibility initiatives, including its upcoming Heroes & Legends Ultramarathon to raise funds and awareness for veteran mental health services. The company has a commitment to go “carbon negative,” meaning the company will remove more carbon from the atmosphere than it generates.

“We’re committed to the planet. We’re committed to children and families. We’re committed to military veterans and first responders,” Marinucci said. “We feel that as an organization we have a greater responsibility than just the [financial bottom line] … The success of the business and the growth of the business is all good and well and we’re going to continue to do that. But the social responsibility initiatives was to give the people that work for us real purpose in knowing that coming to work for us and doing a good job means more than a robust P&L. It means we’re having an impact throughout the world and we’re setting an example.”

Being public will give DMS’ social responsibility initiatives a broader platform and hold others accountable as well, Marinucci said.

Leo is coming up on a Feb. 15 deadline to complete an initial business combination. The company’s shareholders are scheduled to vote at a special meeting Tuesday to extend that deadline to July 31.

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