Power Digital offers technology and services that help companies enhance their marketing performance
By Laura Kreutzer
Updated March 14, 2022 1:23 pm ET
Court Square Capital Partners has backed marketing technology company Power Digital Marketing to help the company further expand its services and clientele, including those in the private-equity industry itself.
Midmarket-focused Court Square is the second private-equity firm in recent years to back the San Diego-based company, which helps businesses, particularly consumer brands, analyze and improve their marketing efforts. Chicago-based Periscope Equity, which first invested in Power Digital in 2019, is exiting its stake.
Although terms of the deal were not disclosed, a person familiar with the transaction said the value of the deal falls somewhere around the middle of a $150 million to $1.5 billion enterprise value range that typifies Court Square’s deals.
Power Digital’s Sprnova technology platform helps companies evaluate and analyze first-party data, which businesses collect directly from their customers and own themselves, and then helps in assessing the data and developing marketing and growth strategies based on that analysis.
“[First-party data is] the most valuable asset, because it’s the truest data source,” said Chief Executive Grayson Lafrenz, who founded Power Digital in 2012. The company said it managed nearly $600 million in advertising spending on behalf of its clients in 2021 and has generated more than 80% of its revenue from e-commerce brands. Clients have included Innovative Technology Electronics LLC’s audio-products brand Victrola, alternative protein producer Beyond Meat Inc., mattress retailer Casper Sleep Inc. and beauty brand Kate Somerville Skincare LLC, according to Power Digital’s website.
Mr. Lafrenz said he sees an opportunity with Court Square to also expand in its business-to-business and private-equity segments.
“We don’t think anyone is doing a great job of both being able to consult those companies on their sales engine, [customer relationship management] and systems, but also bring in the performance marketing side, where you can actually drive qualified leads to the sales organization,” he said.
Power Digital developed a business line catering to private-equity firms after working with a portfolio company of a private-equity firm.
“I was blown away by the amount of money and resources they spent…on accounting, legal [or] technology diligence,” Mr. Lafrenz said, adding that he saw firms spend much less time and money on diligence of growth opportunities.
Power Digital since then has worked on various marketing and growth projects with more than 50 private-equity and venture-capital firms, a number that Mr. Lafrenz predicts will increase this year.
Court Square is backing Power Digital out of its roughly $2.7 billion Court Square Capital Partners IV LP fund, according to Kevin White, a partner at the New York-based firm.
Mr. White, who noted that 72% of the companies that Court Square has invested in through its two latest funds have been founder-, family- or management-owned businesses, said he sees opportunities for Power Digital to expand its services, including through acquisitions.
Under Periscope’s ownership Power Digital completed four add-on deals, including the 2020 purchase of Covet Public Relations, a consumer brands-focused agency, and the acquisition last year of Social Method, a digital media-buying and creative agency with an emphasis on Meta Platforms Inc.’s Facebook and Instagram.
“This company has many, many services that they offer to their clients,” Mr. White said. “M&A is a big part of the reason why you can continue to add services to the fold.”
Write to Laura Kreutzer at email@example.com
Source: WSJ Pro Private Equity