Last updated on July 2nd, 2019 at 09:21 pm
Following its exit from the pharmaceutical industry last year, Milwaukee-based The Dohmen Co. announced today it has transitioned from being a family-owned corporation to a benefit corporation owned by a private foundation.
Dohmen, formerly an S corporation with more than 40 shareholders, is now wholly owned by The Dohmen Company Foundation, a 501(c)3 nonprofit organization. The change in ownership structure took effect Jan. 1. Dohmen said it is the first company in the United States to make such a transition.
Under the new structure, profits of The Dohmen Co. will be donated to the foundation for charitable purposes. The company said the new structure protects its commitment to investing in charitable causes against future changes in company leadership or ownership.
Each of the company’s shareholders either redeemed his or her shares or contributed them to the foundation, with more than 50 percent of the outstanding shares having been contributed, Dohmen said.
“We’ve had a lot of success over the years and achieved much for our shareholders,” said Cynthia LaConte, chief executive officer of The Dohmen Co. “Now, instead of using the business to further enrich our shareholder base, we can use it to enrich our community. This allows us to measure organizational success not just in financial terms, but also by our ability to make investments with a high social return or SROI.”
In 2018, Dohmen completed the sale of its Dohmen Life Science Services business to Chicago-based Water Street Healthcare Partners and New York City-based JLL Partners for an undisclosed price. Dohmen Life Science Services is now under the Milwaukee-based Eversana umbrella. A month before that deal closed, the company announced its launch of a new subsidiary and the state’s first benefit corporation, Dohmen Constellations.
The change in The Dohmen Co.’s ownership structure was made possible by a provision in the Philanthropic Enterprise Act, which was championed by Newman’s Own Foundation and enacted in 2018. Newman’s Own, the food company founded by the late actor Paul Newman and author A. E. Hotchner, invests 100 percent of its profits from the sale of its products to the private non-profit foundation.
“After the sale of DLSS, our Life Science Services division, we had an opportunity to rethink our purpose as a company,” LaConte said. “We wanted to have a bigger impact. The Newman’s Own model seemed like an ideal way to institutionalize the best elements of Dohmen ’s culture — entrepreneurship and generosity.”
The Dohmen Co. has committed $23 million from company profits to the foundation since it was established in 2008.
That approach, the company said, limited the foundation to “shorter-term interventions without the capacity to address systemic causes of health and wealth disparities.”
“Being able to use the commercial side of our business to power the foundation will allow us to invest in long-term, best practice strategies to address the significant life expectancy gap affecting our distressed communities,” LaConte said.
The Dohmen Co. has about 100 employees, following the divestiture of its life science division. The company said it is positioned to grow its commercial operations through future acquisition. Both the foundation and the company plan to add an unspecified number of employees this year, according to a news release.
“In this tight labor market, we believe this change will also positively influence our ability to attract the best and brightest talent,” LaConte said. “People today want purpose, not just a paycheck. Increasingly, they’re aligning with organizations that are measuring growth and progress in human terms rather than solely relying on financial metrics to articulate success.”
The 160-year-old company started in 1858 as an apothecary before becoming a manufacturer and then a wholesaler. Today, The Dohmen Co. umbrella includes: the Dohmen Company Foundation, health care technology platform developer Red Arrow Labs and Horizon Lab Systems, the software product operated under Red Arrow.
LaConte will be the keynote speaker at BizTimes Media’s annual M&A Forum on April 3 at the The Pfister. Registration is available at biztimes.com/maforum.