Stagwell: We're Done With Uncapped Earnout M&A Model

It’s been a busy week on the M&A front for Stagwell.

First, it acquired UK media shop Goodstuff. Today, the company confirmed acquiring 49% of Portland, Oregon-based digital agency Instrument, which makes the shop a wholly-owned subsidiary. MDC Partners, which Stagwell merged with last year, acquired 51% of the agency in 2018.

Founded in 2002, Instrument is one of Stagwell’s fastest-growing agencies. When MDC bought its majority stake three-plus years ago, the agency had 175 people working as strategists, producers, designers, engineers and content creators on behalf of clients such as Google, Nike, Levi's, Airbnb, Sonos and Dropbox. 

Having grown 30% in revenue over each of the past two years, the agency now has more than 400 staffers. Salesforce and Epic Games are also clients.

Instrument is part of Stagwell’s Constellation division, which also includes 72andSunny, CPB, Redscout and Hecho Studios. CEO Justin Lewis and his team will continue to run the agency.



The deal includes a fixed-payment amount spread across a three-year term, split between cash and stock in Stagwell Group. “This mutually beneficial structure provides Instrument’s management with appropriate incentives for their efforts and creates significant shareholder value,” Stagwell stated.

The firm noted the deal constituted a restructured M&A model that does away with uncapped management earnouts, the preferred MDC model. Previous MDC transactions that included uncapped earnouts have also been restructured, Stagwell said. That helps create a more stable balance sheet, the company added.

Stagwell CEO Mark Penn credited the agency’s management team for driving strong growth “while developing a culture of innovation, inclusion and outstanding client service.”


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