In an astute strategic maneuver aimed at broadening its diversified portfolio, Onfolio Holdings Inc. (Nasdaq: ONFO, ONFOW) has announced the acquisition of a majority interest in DDS Rank, a digital marketing firm specializing in services tailored for dental practices. This acquisition, facilitated through Onfolio’s Special Purpose Vehicle “Onfolio Agency SPV LLC,” underscores the company’s dedication to growth and innovation within the digital marketing sector.
On June 24, 2024, Onfolio Holdings revealed the completion of this significant acquisition. DDS Rank is renowned for its specialized digital marketing solutions, including search-engine optimization (SEO), paid advertising, and web design, all aimed at enhancing the online visibility and patient acquisition capabilities of dental clinics. In 2023, DDS Rank reported approximately $310,000 in revenue and $190,000 in unaudited adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), indicating a solid foundation ripe for further expansion.
Dominic Wells, CEO of Onfolio Holdings, expressed his enthusiasm for the acquisition, highlighting the untapped potential within DDS Rank. “DDS Rank was an obvious acquisition for us. While it is much smaller than our next anticipated acquisition and other acquisition candidates in our pipeline, it has very significant untapped potential,” Wells stated. He further emphasized that with enhanced marketing efforts and operational improvements, Onfolio aims to double DDS Rank’s revenue and EBITDA within the next one to two fiscal quarters.
A notable aspect of this acquisition is its innovative financial structure. Valued at $600,000, the deal was completed without Onfolio Holdings needing to invest any cash or common shares directly. Instead, the acquisition was financed through Onfolio’s special purpose vehicle, which invested $200,000 for a 34% minority interest in DDS Rank. Onfolio itself will hold a 66% majority stake, funded through $200,000 in Series A Preferred Shares and a $200,000 secured promissory note due on May 31, 2026.
This financial structure is designed to protect Onfolio shareholders from dilution. The Series A Preferred Shares and secured promissory notes are configured to pay dividends and interest without converting into common shares. “We’re completing this acquisition without investing any cash or common shares from Onfolio Holdings,” Wells reiterated, underscoring the efficient and shareholder-friendly nature of the transaction.
DDS Rank has established a robust business model that has proven successful in the digital marketing landscape. Approximately 91% of its revenues are subscription-based recurring revenue, offering a stable and predictable income stream. This model ensures long-term relationships with customers and provides a reliable revenue base that can be scaled effectively. The company’s focus on enhancing the online presence of dental clinics has driven substantial web traffic and increased patient appointments for its clients. This specialization in the dental sector positions DDS Rank as a leading player in a niche market, offering scalable and highly effective marketing solutions.
Onfolio’s acquisition strategy is centered on identifying businesses with high growth potential and integrating them into its portfolio through non-dilutive financial structures. This approach allows Onfolio to expand its holdings continually while maintaining shareholder value. “We have negotiated several acquisitions with structures similar to the DDS Rank transaction and have enough capital to close because of our special purpose vehicle non-dilutive funding,” Wells noted. He added, “We now have a clear path and timeline to profitability, without the need for raising any additional equity capital.”
This strategic vision highlights Onfolio’s commitment to sustainable growth. By leveraging innovative financial instruments, the company can fuel its expansion without over-leveraging its equity base. This model may serve as a blueprint for other companies seeking to grow without diluting shareholder value.
The acquisition of DDS Rank is poised to unlock significant growth potential. Onfolio’s resources and expertise in managing online businesses will likely accelerate DDS Rank’s growth trajectory. Enhanced marketing efforts and operational improvements are expected to drive better customer acquisition and retention strategies, ultimately leading to increased revenue and EBITDA. Onfolio’s confidence in doubling DDS Rank’s financial figures within a short span reflects the untapped potential within the company. With the right operational enhancements, DDS Rank could see substantial growth, further solidifying its position in the digital marketing sector.
The acquisition of DDS Rank by Onfolio Holdings sets a precedent for future deals and strategic expansions. Onfolio’s use of non-dilutive funding mechanisms and its focus on high-potential online businesses could attract more investors and partners interested in a sustainable growth model. This approach not only diversifies Onfolio’s revenue streams but also strengthens its position in the digital business landscape. For DDS Rank, the acquisition means accelerated growth and expanded service offerings. Onfolio’s resources and expertise will likely help DDS Rank innovate its service delivery, enhance marketing efforts, and improve operational efficiencies. These improvements could lead to better customer acquisition and retention, driving further growth.
Moreover, Onfolio’s pipeline of other acquisition candidates suggests that this is just the beginning of a series of strategic expansions. The company’s approach to growth through innovative financial structures and targeted acquisitions could redefine how digital businesses are bought and integrated.
The acquisition of DDS Rank by Onfolio Holdings is a well-calculated move that promises growth and stability for both entities. Onfolio’s innovative financial strategies and commitment to shareholder value set new standards for how acquisitions are structured and executed. As Onfolio continues to leverage its expertise and resources, it could become a significant player in the digital business acquisition space, driving growth and innovation across its diversified portfolio.
