Onfolio Holdings to Acquire Majority Stake in DDS Rank, Eyes Growth Potential

Business News

WILMINGTON, DEOnfolio Holdings Inc. (Nasdaq: ONFO, ONFOW) announced plans to acquire a majority interest in the assets of SEO Marketing Inc., known as DDS Rank. The deal is expected to close early this week.

The acquisition, facilitated by Onfolio’s Special Purpose Vehicle (SPV) “Onfolio Agency SPV LLC,” will see Onfolio taking a 66% ownership stake in DDS Rank. The SPV will hold a minority interest of 34%.

DDS Rank specializes in digital marketing services for dentists, including search engine optimization, paid advertising, and web design. In 2023, DDS Rank generated approximately $310,000 in revenue and $190,000 in unaudited adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Onfolio CEO Dominic Wells expressed confidence in the acquisition’s potential. “DDS Rank was an obvious acquisition for us. While it is much smaller than our next anticipated acquisition and other candidates in our pipeline, it has very significant untapped potential,” said Wells. He believes Onfolio can double DDS Rank’s revenue and EBITDA within one to two fiscal quarters through enhanced marketing and operational improvements.

Wells elaborated on the deal structure, explaining that Onfolio will acquire DDS Rank without investing cash or common shares from Onfolio Holdings. The $600,000 purchase price will be financed through the SPV, which is investing $200,000 for a 34% stake. Onfolio will secure its 66% stake via $200,000 in Series A Preferred Shares and a secured promissory note for $200,000 due in 2026.

Importantly, the Series A Preferred Shares and secured promissory notes pay dividends and interest but are not convertible into Onfolio common shares. This structure ensures the deal is non-dilutive to Onfolio shareholders, preserving their equity while enabling growth.

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Wells highlighted the strategic importance of this acquisition model. “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. We expect to close another acquisition this month and achieve profitability near term.”

Unlocking Growth: Non-dilutive Strategies in Strategic Acquisitions

This transaction could have broader implications for Onfolio’s growth strategy. By leveraging non-dilutive funding mechanisms, Onfolio can pursue acquisitions aggressively without compromising shareholder equity. This approach sets a precedent for future deals and positions the company for accelerated growth.

Onfolio’s ability to quickly scale DDS Rank’s operations underscores a broader trend in the digital marketing sector, where targeted investments and strategic improvements can yield rapid returns. For DDS Rank, integration into Onfolio’s portfolio could mean enhanced capabilities and market reach, potentially transforming it into a leading player in dental digital marketing.

As Onfolio moves forward with its acquisition strategy, its focus on non-dilutive funding and operational efficiency may serve as a model for other companies aiming to expand through strategic acquisitions without diluting shareholder value.

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