Stagwell advertising & marketing assignments

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Stagwell Inc was formed in August 2021 from the acquisition of MDC Partners by smaller rival Stagwell Group. It is a mid-sized North American marketing group, housing a broad portfolio of creative and diversified marketing agencies, headquartered in the US, but with a modest international network. The merger followed several troubled years for once-high-flying MDC Partners. Operating primarily as a venture capital investor, it accumulated stakes in a collection of separately branded, often single-office agencies, several of which gradually developed an international profile. MDC become best known for its shareholdings in three admired US-based creative agencies, Crispin Porter & Bogusky, 72andSunny and Anomaly, each of which also established outposts in Europe and even the Asia Pacific. Another agency - formerly KBS - was merged into Swedish agency Forsman & Bodenfors, with all offices adopting the latter's name. Other subsidiaries include fashion specialist Laird & Partners, Detroit-based Doner and media agency Assembly, as well as a sizeable collection of other agencies, mostly operating below the radar of the main industry. The key benefit MDC originally offered its partner agencies was an upfront payout for their shares. Beyond that, businesses were left with operational independence, including the freedom not to work with each other to grow faster or more efficiently. Gradually, though, MDC was forced to encourage synergies between its various subsidiaries; but after several years of rapid growth, the group ran into a succession of increasingly serious problems in the 2010s. An SEC investigation into expenses claims filed by founder Miles Nadal led to his abrupt departure in 2015; soon afterwards, the rapid growth curve began to stall, and in 2018 MDC finally launched a strategic review. That led to the effective takeover of the group by industry veteran Mark Penn, who became CEO and controlling shareholder in Spring 2019. As a result, MDC was partnered by Penn's then-separate Stagwell Group roll-up, with its own roster of agencies, of which the best known are perhaps Code & Theory, Harris Research and Observatory (formerly CAA Marketing). Eventually, in mid 2020, Stagwell launched an offer to buy MDC outright, but this took almost a year to complete, in part as a result of stiff opposition from some MDC shareholders. The merger was finally approved in June 2021 and completed in early August. MDC's combined revenues hit a high of $1.51bn in 2017, before slipping back over the next three years. Net revenue for 2020 was just $1.0bn, and the group reported a net attributable loss of $229m. In more than 20 years, MDC Partners reported a net annual profit on just two occasions. Stagwell Group reported revenues of $633m in 2020 and net income of $71.5m.

Capsule checked 9th August 2021

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MDC Partners' quarterly organic growth since 2016
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Historical profile information for MDC Partners

Recent stories from Adbrands Update:

Adbrands Update 4th Nov 2021: The newly expanded Stagwell reported strong continuing growth in 3Q following its absorption of MDC Partners. On a pro forma basis, organic growth for the quarter was 22.8%. Excluding the advocacy business that was unduly boosted in 2020 by the Presidential election, organic growth would have been almost 28%. However Stagwell remains significantly smaller than rival groups, around two-thirds the size of Havas. Net revenue for the quarter came in at $409m, but steep financial expenses, restructuring costs and the payout to preferential or noncontrolling shareholders resulted in an attributable net loss for ordinary investors of $2.0m. Stagwell / MDC Partners' quarterly organic growth since 2016 See chart (subscribers only)

Adbrands Update 16th Sep 2021: Stagwell merged its existing digital media arm ForwardPMX into MDC Partners' Assembly to create a significantly larger entity that will continue to trade under the Assembly name. The expanded business claims a team of some 1,500 people spread across 30 offices in 20 countries. ForwardPMX leader James Townsend becomes CEO of the merged business, with Valerie Davis as North America president.

Adbrands Daily Update 4th Aug 2021: Stagwell Group completed its takeover of MDC Partners, creating a new Stagwell Inc entity. The MDC Partners name has been eliminated. However, both groups reported separate results for 2Q and the first half of 2021. Stagwell Group reported a meteoric organic leap of 33% to $182m for the quarter, with net income of $18.7m; while MDC Partners rose 27% to $298m, with net income of $1.7m. On a proforma basis, the group expects to report revenues of around $2.1bn to $2.2bn for the full year.

Adbrands Daily Update 26th Jun 2021: Despite continuing opposition from Indaba Capital Partners and a few other shareholders, a majority of investors approved the proposed merger of MDC Partners with Stagwell Group. A little over three quarters of MDC shareholders voted in favour of the merger. Stagwell shareholders including Mark Penn will end up with around 69% of total equity in the mered entity, with MDC shareholders at 31%. Those percentages may change depending on the number of preference shares in MDC converted into equity.

Adbrands Daily Update 16th Jun 2021: MDC Partners has postponed the shareholders' meeting that was due to take place on June 22nd for a vote on whether to accept Stagwell's takeover terms. Yet another sweetener offer from Stagwell failed to win over key investor Indaba Capital, and there are signs that other shareholders are falling into line behind the activist group. The delay is intended to give MDC's Special Committee more time to evaluate Stagwell's offer. a new date will be scheduled in due course. [Updated: The vote will now take place on July 19th.]

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