MDC Takes Majority Stake in Crispin

NEW YORK MDC Partners announcement today that it was taking a majority stake in Crispin Porter + Bogusky follows the holding company’s quieter increase to full ownership of Kirshenbaum Bond + Partners.

Crispin is now 77 percent owned by the Toronto-based holding company, which bought a 49 percent stake in the shop in 2004. Crispin has offices in Miami and Boulder, Colo.

MDC paid a total of $48 million for the equity increases in Crispin and Kirshenbaum. The agencies said they will use the money to expand operations. Crispin said it was considering opening a London office. “We have recently discovered that there are countries other than the U.S.,” joked Chuck Porter, chairman of Crispin and chief strategist for MDC. “It’s [expanding overseas, that’s] something we’ve had conversations about. Among the countries we’ve looked at, England happened to be one of them.”

As for Kirshenbaum, the New York agency is looking to fund new acquisitions, said Richard Kirshenbaum, co-chair. “We could spend it on new technologies or a new Hispanic unit. We see a lot of new startups and ways to communicate with the consumer base,” he said.

Naturally, both agencies said the additionals investment would not negatively impact their respective creative cultures. “We consider ourselves to be partners with MDC,” said Kirshenbaum. “We think Miles trusts us to run the business and our names are on the door.”

Said Porter, “It’s a non-event. It doesn’t mean anything in terms of the agency or management day to day. We’ve had the option for a long time to sell a larger stake to MDC and we finally decided to exercise it.”

For Nadal, the increased ownership means, “Nothing, business as usual. They will continue to be empowered.”

In the past, Nadal has looked to buy 50-80 percent stakes in shops, usually funded by a mix of cash and MDC shares. Two weeks ago, the company increased its stake in Kirshenbaum from the 60 percednt it bought in 2004 to 100 percent. Asked about the apparent shift in strategy Nadal said, “Although we have entered into an agreement to acquire [the remaining] 40 percent, in practical terms they have an upside of 40 percent. That means that they maintain all the benefits of owning 40 percent of the company aside from the distribution of cash.”

Nadal went on to say that before 2010, when the agreement with Kirshenbaum expires, that it will be re-negotiated to give the principles, Jon Bond and Richard Kirshenbaum, additional equity.

MDC’s other holdings include Cliff Freeman and Partners here and Northstar Research Partners in Toronto.

This story updates and replaced an earlier item with additional interviews and information.