Embattled advertising company MDC Partners Inc. MDCA 6.98% is exploring a potential sale, amid a slowdown in its performance and following the exit of its chief executive, according to people familiar with the matter.
The New York-based company, which owns ad agencies including Crispin Porter + Bogusky and 72andSunny, is dealing with cost cuts by clients, a failure to win enough new business and a heavy debt load, leaving some investors frustrated.
Boutique investment bank LionTree, which has worked with MDC in the past, has recently shopped the company to potential buyers, according to some of the people.
MDC, which has a market capitalization of $249 million, has seen its stock price tumble almost 60% over the past year.
This is the second time MDC has explored a sale in two years. In 2016, the company hired LionTree to explore strategic options. As a result of that process, Goldman Sachs invested $95 million in MDC, giving it a 15% stake in the company.
A spokeswoman for MDC Partners declined to comment.
MDC’s problems are emblematic of the tumult in the broader ad industry. Many companies have been hit by shifts in the business, as brands cut back on the fees they pay to ad agencies and demand newfangled digital marketing approaches where consumer data play a critical role.
That has pressured ad companies to reassess their business offerings and restructure their agencies to meet the demands. Meanwhile, new entrants such as consulting firms are encroaching on Madison Avenue’s turf.
MDC’s net income for the second quarter declined to $1 million from $8 million in the year-earlier period. Scott Kauffmanstepped down as the company’s CEO earlier this month, but is expected to retain his board role, the company said at the time.
Some MDC executives, investors and board members have become frustrated with the company’s performance and management, according to people familiar with the company.
“The handwriting is on the wall that things were slower than you thought —why did it take so long to deal with your cost structure?” said investor Leon Cooperman of hedge fund Omega Advisors, Inc., during MDC’s second-quarter earnings call. “Shouldn’t we have been reducing costs 6, 9, 12 months ago rather than doing something now,” he said.
Ad agency 72andSunny, which has worked for brands such as Facebook, Samsung and General Mills , recently offered to buy itself back from MDC, according to people familiar with the matter.