Holmes Report 18 Mar 2019 // 10:04AM GMT
NEW YORK—Stagwell, the private equity firm led by former Burson-Marsteller chief executive Mark Penn, has invested $100 million in ad and PR agency holding company MDC Partners, which has seen its share price and market capitalization decline sharply in recent weeks.
Under the terms of the investment, Penn will join MDC as chief executive and a member of its board of directors.
MDC’s public relations holdings include Allison+Partners, Exponent, Hunter, KWT (formerly Kwittken), Sloane & Company, and Canadian firm Veritas. Stagwell’s portfolio includes Washington-based public affairs company SKDKnickerbocker, while the firm also has an investment in New York’s Finn Partners.
MDC has struggled since the resignation of its founder and chief executive Miles Nadal in 2015, and began a “strategic review process” and CEO search in September of last year. After the news broke about Stagwell's interest in an investment, MDC shares declined to a 52-week low of $2.01, giving MDC a market cap of just $120 million.
Irwin Simon, presiding director of MDC’s board, welcomed Penn’s arrival. “Throughout his career, Mark has proven himself a powerful strategic operator and passionate supporter of agencies. He shares our vision and our values, and his background as a marketer, agency founder, global thought leader and investor will be critical to bolstering our structure, solutions and services.
“At the same time, the financial flexibility and resources provided by this investment will allow for a strengthened capital structure as well as the liquidity to selectively invest behind our world-class talent while focusing on high-priority growth areas.”
Penn, who prior to his time at BM was co-founder and CEO of Penn Schoen Berland, a global market research firm, has also held senior corporate positions at Microsoft, and has served as a senior adviser to corporate and political leaders including Bill Gates and Steve Ballmer, Bill Ford, UK Prime Minister Tony Blair, Senator Hillary Rodham Clinton and President Bill Clinton.
“I have admired MDC for a long time and believe wholeheartedly in its mission,” he says. “MDC is home to some of the world’s best creative and strategic talent; strategists with a deep understanding of the way technology and media solutions address the needs of today’s modern marketer. Its agencies share an impressive entrepreneurial culture and the network as a whole is steeped in untapped potential."
MDC has been unusual among holding companies in allowing its agencies to develop in their own way—an approach that has generally paid off for its PR firms such as Allison, which has expanded internationally and made several acquisitions. But Penn has told reporters he would like to see greater collaboration between the various agencies.