Company continues its strategy of snagging entrepreneurial shops
MDC Partners, which last week bought a 60 percent stake in Kirshenbaum Bond & Partners and is still in talks with Cliff Freeman and Partners, is also considering startups as a way build its portfolio, said Chuck Porter, who scouts acquisitions for the Toronto-based holding company.
"There are a lot of smart, talented people not happy where they are [who] are looking for a partner—looking to start something new," said Porter, who along with his partners sold 49 percent of his Miami agency, Crispin Porter + Bogusky, to MDC in 2001. "If we uncover the right situation, that will happen."
MDC's deal with KB&P followed several months of talks. The New York agency claims $525 million billings and nearly $50 million in revenue. Sources said the cash-and-stock earn-out deal will play out over five to seven years and could pay out up to $75 million.
The Freeman talks are at an earlier stage, and a sale is not expected to be imminent, sources said. MDC also owns a majority stake in New York's Margeotes|Fertitta + Partners.
Porter called KB&P "one of the two best independent agencies of significant size left in America" (the other being Wieden + Kennedy). KB&P's allure is its creative reputation and its diverse client roster, Porter said. In addition to its $95 million Jergens account and $50 million Brown & Williamson media account, both won this year, the shop works for Verizon Super Pages, Target and Hennessey.
"They're one of the very few large independents with a reputation of great creative, and they were of a size that distinguished them from most of the other firms in the marketplace," said Miles Nadal, chairman and CEO of MDC Partners.
KB&P principals Richard Kirshenbaum and Jon Bond talked to Porter about his experience with MDC, and were particularly interested in how much the company would get involved in the business. Porter said MDC meddling "is zero, outside the financials."
"They wanted to know, 'Are we getting into bed with someone who'll drive us crazy?' " Porter said.
The sale left the ranks of independents even thinner. "As a flag bearer for independent agencies, I'm sorry to see another good one go," said Stan Richards, principal of The Richards Goup in Dallas.