Diamandis does Donnelley Marketing - Peter Diamandis - Update

STAMFORD, CONN.--Donnelley Marketing, a database and direct marketing unit of Dun & Bradstreet, was sold to a private investor group for $200 million in February, and a familiar name appeared among the principals: Peter Diamandis.

But contrary to media reports, Diamandis is not a major investor, says Jack Purcell Jr. of Grenadier Associates, which is a principal in the group that led the leveraged buyout.

The deal, some nine months in the making, was put together by Chicago investment bankers Peter Smith and Al O'Neill, along with Grenadier Associates' Jack Purcell and his son Jack Jr. Financing was secured by Chase Manhattan, which took back $50 million for an equity position. Diamandis admits to being somewhat embarrassed by the attention given him. "This is really Peter [Smith] and Al's deal" he says. "They should get the credit."

Donnelley generated nearly $46 million in 1990 on sales of $250 million. The company sells its consumer database--one of the largest in the country--and distributes coupons, catalogs and product samples.

Diamandis' involvement (along with that of his associate Robert Spillane, who left with him in the much publicized split with Hachette Magazines in September) didn't develop until December.

Spillane, along with Jack Purcell Jr., will spend the next six months overseeing the new owners' investment in the Stamford-based company. "Bob will be the guy to get his hands dirty," says Purcell Jr. "He's the one who will have to figure it out."

Grenadier's Purcell says that they made this investment because they see "target marketing as the way of the nineties. We believe that measurability is the future of marketing, not mass media."

Diamandis likens a database company to a magazine's circulation department. "Essentially, you are managing the churn of a large circ file," he says. "Bob and I got involved because we think there is an opportunity to append some magazines to this company, if they are correctly targeted."

His severance agreement with Hachette preclude Diamandis from being directly involved in magazines until July 1, but he is actively looking at prospective properties with the thought of "building a company in the $500 million to $1 billion range." He admits that his last venture, though profitable, produced financial pressures that forced him to sell to Hachette. "This time the principals have plenty of money and very little debt," he says. "I'm looking to build a company instead of flipping it."

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