The clock is ticking on the proposed American List Counsel/Direct Media Inc. deal. A non-binding letter of intent signed by Princeton, NJ-based ALC and Direct Media’s parent Acxiom in June is set to expire on July 30, according to Acxiom group leader Steve Brighton.
“We either have to agree that ALC is going to purchase the company or the deal’s off and we are back to where we started,” said Brighton in an interview.
Purchase price and financing arrangements have been discussed, according to Brighton, who has casually referred to the pending deal as a “sale” in two interviews.
Meanwhile, the list industry has been speculating about possible bars to the sale.
For example, reliable sources told DIRECT Newsline that business-to-business brokers at DMI have expressed strong reservations about the proposed deal. And since the brokers have no employment contracts, there’s nothing to keep them from walking, should a sale or other arrangement occur. It is unclear whether these reservations could sour the deal.
In addition, sources speculated, a list company acquiring DMI would probably have to deal with a different accounting system.
A privately held company before its sale to Acxiom three years ago, DMI focused on cash receipts while publicly traded Acxiom was geared toward accrued revenue.
DMI, according to Brighton, processes between $500 million and $600 million a year in cash flow before commissions.
Before the Acxiom purchase DMI was an S-corporation, and therefore limited to a maximum of 75 stockholders. If plans call for ALC or a new entity to go public, it will have to keep its books on an accrual system, reflecting revenue and expenses when incurred, as opposed to based on cash-in-hand. It would become one of the few list companies that do so.
DMI could handle either accounting system: According to Brighton, it currently supports both, reporting its finances to publicly traded parent Acxiom on an accrual basis but paying its list owners on a cash basis.
Clearly talent is the main asset that DMI brings to the table. “There is talent there and I think list companies are going to do their best to attract that talent,” said Lonnie Mandel, chairman, the SpeciaLists Ltd., Weehawken, NJ, adding that SpeciaLists hasn’t hired anyone from DMI.
According to DMI client Omaha Steaks, there hasn’t been a ripple in service. “We’re very pleased with how Direct Media is handling the possible changes,” said Jim Paschal, director of marketing at Omaha Creative Group, Omaha, NE, an Omaha Steaks-affiliated company. “We feel like they’ve got a strong team of brokers. Unless there are some big changes, we feel there will be business as usual. As far as I’m concerned, nothing has changed.”
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