Continuing its latest acquisition spree, MDC Partners has acquired a majority stake in Canada’s leading strategic shareholder advisory and communications firm Kingsdale Shareholder Services.
MDC is paying approximately $50 million plus future performance payouts for the stake, according to The New York Times. MDC however, declined to confirm that report or disclose the terms of the deal.
The acquisition would seem unusual for an ad-marketing holding company, but MDC said it fit well within its newly formed financial communications and strategic advisory group, which includes PR shops Allison + Partners and Sloane & Company, as well as the recently acquired brand and political consultant Luntz Global, among other firms.
“In an era of escalating M&A activity, increasing shareholder activism,and heightened influence from advisory services firms, our clients are in greater need of specialized strategic communications and proxy advice at the C-suite and board level to pursue their business strategies,” said MDC Partners Founder and CEO Miles Nadal. He cited Kingsdale’s “clear leadership” in the sector, particularly in Canada, with plans to expand the company’s U.S. and global activities. “Because of the complex regulatory environment, this area of specialized services is one of the fastest growing fields of communications and marketing globally,” Nadal added.
Kingsdale is credited with having advised on M&A deals valued at more than $160 billion. Company founder and CEO Wes Hall has led prominent deals and proxy contests, including Pershing Square Capital Management’s campaign against the board of Canadian Pacific Railway, Jana Partners' campaign against Agrium, and Petro Canada’s $19 billion merger with Suncor Energy.
Hall established the firm in 2003. “In MDC, we see the ideal partner to help accelerate the next phase of our growth and success, expanding our geographic footprint and responding to client demand for our strategic counsel in new areas where we have unique insight,” Hall said.
For MDC, it’s the second acquisition in as many months. In January, it bought a majority stake in Luntz Global. Earlier, MDC CFO David Doft said that 2014 would be a period of renewed acquisition activity for the holding company after taking a couple of years to fully integrate firms from an earlier spree into the organization.
MDC is looking to invest in agencies and other ad-marketing firms with annual revenues in the $10 million to $30 million-range that would yield a 20% return on investment annually. The company expects that revenue from acquisitions would contribute 3% to 5% of MDC’s annual revenue growth on top of organic growth, which is expected to average 10% annually over the next several years. According to Doft, “next wave” creative agencies, insights, analytics, media shops and PR firms are on the shopping list.