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Is plummeting MDC being prepared for a sale?

Is MDC Partners, the gaggle of creative agencies formed by Miles Nadal, up for sale?

Nadal’s successor as CEO Scott Kauffman admitted the year “had not gone as planned” when he announced Q3 figures: revenue up 6.3 per cent to $349m, organic growth up 2.7 per cent. Far worse though was yet another loss, $33.6m blamed on its “experiential” business. This included an impairment charge of $29.8m and MDC stock took a hammering, falling 60 per cent in a day. MDC is now valued at a bargain basement $180m.

mdc-partners-repairs-damageThe hope for MDC, which owns all or most of agencies including Anomaly, 72andSunny and KBS, was that it would finally move into profit following the departure of Nadal and his extraordinary expenses regime. It recently bought Sweden’s highly regarded Forsman & Bodenfors, mainly for stock. This looked a risky deal at the time and looks positively foolhardy for the Swedes now.

MDC is suspending its quarterly dividend, lowering guidance and has hired LionTree Advisors to assist in “evaluating its financial and capital structure strategy.” Which usually means preparing a sale.

Who would want to buy MDC? While it has some notable creative agencies they’re all different and so creating a viable global network is difficult in the extreme. Anomaly clients, for example, probably wouldn’t buy a combined MDC agency in other markets. Also it doesn’t have a big media business.

More likely is the sale or even closure of some agency brands. But it wouldn’t be the only holding company looking at that option.

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