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Court Square Acquires Power Digital

Tech-enabled marketing service company Power Digital is poised for another growth spurt.

On March 15, the company announced a strategic capital partnership with Court Square Capital Partners, a private equity firm with $7.5 billion in assets under management.

“This partnership puts Power Digital one step closer to realizing our day-one mission of becoming the most valued and respected privately held performance marketing platform in the world,” said Grayson Lafrenz, CEO and founder of Power Digital. “The Power Digital team is very excited to be working with Court Square due to their extensive experience and deep industry knowledge, which will help to drive the data-first approach that encompasses everything that we do. We are delighted to be partnering with them in the next phase of our growth trajectory.”

Under the terms of the deal, Power Digital will continue to operate out of its San Diego headquarters, with Lafrenz taking on an additional role as chairman.

 

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The financials of the deal with Court Square were not disclosed, but a person familiar with the transaction told the Wall Street Journal that the value falls in the middle of the $150 million and $1.5 billion enterprise value range that is typical of Court Square deals.

“We have been deeply impressed by the growth of Power Digital since its inception in 2012 and are excited to partner with Grayson and the Power Digital team for the company’s next phase of growth. This investment is a testament to our 40-year track record of successfully partnering with founders, families, and manager-owners to help drive significant value creation,” said Kevin White, partner at Court Square. “Power Digital has all of the characteristics of a Court Square investment.

Building on Growth

Power Digital’s acquisition by Court Square comes on the heels of a 2019 acquisition by Periscope Equity, who has now exited its stake in the company it helped though a strong growth cycle.

“Power Digital’s exponential growth is the result of the management team’s flawless execution of the company’s three-year strategic plan,” said John Findlay, partner at Periscope Equity. “Our partnership with Power Digital has been an absolute thrill and we are beyond confident the company is well-positioned to continue on its growth trajectory with the Court Square team.”

Lafrenz said the strategic plan with Periscope was to grow Power Digital through acquisitions of its own. From October 2019 to December 2020, Power Digital acquired content and SEO consulting firm Factorial Digital, boutique public relations firm Covet PR, technology platform DataQ and Facebook advertising company Social Method.

Power Digital’s growth plan under Periscope appears to be working. Last year, the company managed nearly $600 million in ad spend and experienced 110% net revenue retention with a 64% net organic revenue growth rate.

 

The company’s client list includes national brands such as P&G;, Bed Bath & Beyond, AirBnB, Peloton and Dropbox; as well as top local clients such as Pura Vida, Stone Brewing, Qdoba and Sycuan.

Power Digital’s tech-enabled marketing services is powered by its proprietary machine-learning platform SPRnova (Nova).

“The technology platform makes us really unique, because for most of our competitors it’s just pure services and so the Nova technology platform gives us a big advantage,” Lafrenz said.

 

“That’s why we’ve grown faster than just about anybody in our industry over the years and made us a lot more scalable.”

In addition to its Nova platform, Power Digital is also known for its dedicated team. Over the last nine years, the company has averaged a 91% employee retention rate – the best in the industry, Lafrenz said.

“What we believe in culture is, it’s not the top, it’s the community we build,” he said. “People talk negatively about millennials, but what we’ve found is that they’re actually the most loyal, hard-working, committed types of team members you can have if you treat them well.”

At Power Digital, management helps employees achieve five vital goals: an earning goal using a compensation model based on effort; a vision statement for their role in the company that allows the company to help with career pathing; a knowledge goal that helps employees gain new skills they want or need; a personal goal for better work/life balance; and a final goal of asking employees what they want from management to help them be successful. Last year, 87% of Power Digital’s 520 employees achieved their goals, Lafrenz said. 

Power Digital

Founded: 2012

CEO: Grayson Lafrenz

Business: Tech-enabled marketing services

Headquarters: San Diego

Employees: 520

Revenue: $76 million (2021)

Website: powerdigitalmarketing.com

Notable: Power Digital has maintained an average 91% employee retention rate over nine years. 

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