Miles Nadal’s MDC Partners keeps growing although ‘ordinary’ profits remain over the horizon

MDC Partners, which describes itself as a ‘business transformation company’ these days, continues its high-wire act.

Reading the small print of its accounts presentation for 2013 you can see that losses increased to $148.9m from $85.4m in 2012, blamed on ‘stock appreciation rights’ (whatever they may be) and deferred payments, presumably to the principals of companies it has acquired. MDC owns stakes in Anomaly, 72andSunny (both of which appear to be doing well) and Crispin Porter (which isn’t).

On the company’s own preferred measure of EBITDA (earnings before interest, tax, depreciation and amortisation) profits increased 33 per cent to $159m on revenue of $1.15bn. If you’re a shareholder you pays your money and takes your choice. But you also get a dividend of $0.18 per share, which is pretty good as the company has never made an ‘ordinary’ profit.

All businesses based on acquisitions like to use EBITDA of course, even the mighty WPP.

Unknown-4And MDC, led by CEO Miles Nadal (left), is still buying. It is shelling out $50m for Kingsdale Shareholder Services, a proxy solicitation business which advises shareholders on deals. This can be seen as either a communications business or a financial business – either way it takes MDC into a new area.

MDC has built up a formidable collection of brands. The trouble is that even when some of them are on the up, others are not. Crispin Porter, at the time its biggest creative capture, has struggled since the departure of high-profile creative founder Alex Bogusky a few years ago. It laid off ten per cent of its staff before Christmas.

Sir Martin Sorrell built WPP the same way but his strategy was to acquire big agency brands – JWT, Ogilvy, Y&R and Grey – with the scale to ride out setbacks because of longstanding relationships with the world’s biggest advertisers going back decades. When he tried to work the same magic with smaller ones – like Red Cell which ended up owning the UK’s Howell Henry – he hit the same problems. Nadal still doesn’t have a big international agency brand.

But he’s still in there pitching. Be interesting to see if he turns an old-style profit in 2014.

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