Mark Penn has been at the helm of MDC Partners for a little over a month and he is already putting his stamp on the holding company, seemingly in positive ways.
Last week, Penn settled a dispute with a very disgruntled and activist shareholder, FrontFour Capital Group.
And let’s face it, FrontFour had every right to be dissatisfied with the holding company’s performance in recent years. It wasn’t the only unhappy camper in the MDC investor fold. Hedge fund manager Leon Cooperman was not shy about letting MDC management know that their performance kind of sucked (in so many words) on numerous quarterly conference calls.
But credit Penn with coming up with a solution, at least for now, to stave a shareholder revolt.
And he also very quickly took a look at MDC’s real estate portfolio and realized that it has to be cut back. He recently issued a memo to executives saying that “We need to invest in state-of-the art digital products and offerings, not bloated real estate palaces, so we can put more money into scarce talent."
Ad Age broke that news last week.
Penn declared in the memo that "our real estate bills defy any logic — as a system we are paying $85 million a year when standard metrics would put that at $45 million — so I have asked all of our partners to hold on real estate for 60 days while we look at various consolidation plans.”
That’s clearly a prudent move, if not groundbreaking. All the holding companies have been looking at such plans over the last couple of years. Penn’s own Stagwell Group is largely consolidated in one complex in New York City.
It makes you wonder why MDC managers didn’t address that issue much earlier. They had a lot on their plate, I guess. Crisis management is hard. It’s early days, but it looks like Penn is up to the task.