Stagwell Inc 8-K, filed Dec 22, 2020
Stagwell Inc (STGW)
About this 8-K
Stagwell Inc filed this 8-K on December 22, 2020, reporting on events of December 21, 2020.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported):
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or Other Jurisdiction |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 7.01 | Regulation FD Disclosure. |
On December 21, 2020, MDC Partners Inc. (the “Company”) issued a press release announcing the Company’s entry into a Transaction Agreement with Stagwell Media LP to combine their respective businesses. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
As described in the press release, in connection with entry into the Transaction Agreement and subject to market conditions and other factors, MDC intends to conduct a consent solicitation for certain waivers and amendments to its 6.50% senior notes due 2024 (the “Notes”) necessary to consummate the business combination. MDC has entered into consent and support agreements with holders of more than 50% of the aggregate principal amount of its Notes to consent to the necessary waivers and amendments in the consent solicitation. MDC has agreed to increase the interest rate on the Notes by 1% per annum effective as of the date hereof and, if the consent solicitation is successfully conducted, to pay a consent fee of 2% to all holders of Notes, or 3% if a supplemental indenture with the waivers and amendments is executed and becomes operative and the Transaction is consummated.
In connection with the Company's entry into the Transaction Agreement, the Company will present an investor presentation to certain of the Company's shareholders and other persons. A copy of the investor presentation is furnished herewith as Exhibit 99.2 to this Current Report on Form 8-K.
The foregoing information (including Exhibit 99.1 and Exhibit 99.2 hereto) is being furnished under Item 7.01. Such information (including Exhibit 99.1 and Exhibit 99.2 hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| 99.1 | Press Release dated December 21, 2020. |
| 99.2 | Investor Presentation dated December 21, 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 21, 2020
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MDC Partners Inc.
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| By: | /s/ David Ross | ||
| David Ross | |||
| Executive Vice President and General Counsel | |||
Exhibit 99.1
FOR IMMEDIATE ISSUE
| FOR: | MDC Partners Inc. | CONTACT: | Alex Delanghe | ||
| One World Trade Center, Floor 65 | 646-429-1845 | ||||
| New York, NY 10007 | pr@mdc-partners.com | ||||
| FOR: | The Stagwell Group | CONTACT: | Beth Lester Sidhu | ||
| 1808 Eye Street, Floor 6 | 202-423-4414 | ||||
| Washington, D.C., 20006 | beth@stagwellgroup.com |
MDC Partners and Stagwell to Combine,
Creating Transformative Global Marketing Network
| · | Combined company poised to deliver meaningful shareholder value creation, accelerated growth and enhanced services to clients. |
| · | Combination unleashes the power of talent and technology around the world to create a top ten global integrated marketing services company that will provide the best-in-class solutions that marketers need to thrive in today’s marketplace. |
| · | More than triples the contribution of high-growth digital services and expertise compared to MDC standalone. |
| · | Existing MDC common shareholders (including Stagwell) will receive 26% of the common equity of the combined company and Stagwell will receive share consideration equal to 74% (excluding Stagwell’s pre-transaction holdings of MDC common shares and without giving effect to any conversion of outstanding preference shares). |
| · | Complementary offerings have the potential to produce 5%+ annual organic revenue growth, decrease net leverage from 4.2x to 3.4x and deliver over $200 million of pro forma cash generation in 2021. |
| · | Run-rate cost savings of ~$30 million from operational efficiencies and integrated services over time, with 90% expected to be achieved within 24 months. |
| · | Plans to invest in expanding services across global markets and in expanded digital marketing products. |
| · | MDC Board of Directors has approved the Transaction, following a recommendation by a Special Committee of independent directors. |
New York, NY – December 21, 2020 MDC Partners Inc. (“MDC”) (NASDAQ: MDCA) and Stagwell Media LP (“Stagwell”) announced today that they have entered into a definitive transaction agreement (the “Transaction Agreement”) to combine their respective businesses, uniting the award-winning talent of MDC with the advanced technology platform of Stagwell to create the transformative marketing company today’s marketplace demands (the “Transaction”). Together, the companies will significantly expand their range of best-in-class capabilities, depth of expertise, and geographic footprint to deliver expanded value to clients, and meaningfully accelerate the combined company’s growth.
“This is a new day for MDC and Stagwell,” said Mark Penn, Chairman and CEO of MDC Partners, and Managing Partner of The Stagwell Group. “Together, they unleash precisely the right talent and technology to create a transformative marketing services company offering scaled Creative Performance. MDC is celebrated for bringing award-winning creative firepower to the world’s leading and most ambitious companies, and Stagwell has been built with deep and sophisticated technology at its core. Unencumbered by legacy structures or assets, the combined company will have the integrated, modern offerings marketers deserve, and the resources to invest meaningfully in our global capabilities, our talent, and our clients’ future.”
The combined company will provide the balance of integrated solutions that modern marketers need to succeed, including second-to-none creativity and communications, scaled media and data capabilities, superior consumer insights, technology development and innovation, and digital transformation. Without giving effect to any conversion of outstanding preference shares, the pre-Transaction holders of MDC Class A and Class B shares (“MDC Shares”) would receive 26% of the common equity of the combined company and Stagwell would receive share consideration equal to 74% of the common equity of the combined company (excluding Stagwell’s ownership in the combined company derived from its ownership of pre-Transaction MDC Shares), each on a pro forma basis. Stagwell and its affiliates are expected to hold approximately 79% of the common equity of the combined company immediately after closing of the Transaction (assuming no conversion of outstanding preference shares of MDC). Further details on the combination and the business offerings of MDC and Stagwell can be found in our investor presentation at www.mdc-partners.com/investors and accompanying video at www.mdc-partners.com.
With over 8,600 employees across 23 countries, the combined company will be ideally suited to lead marketers into the future, with deepened expertise in digital services, and more than tripling high-growth digital offerings to 32% of the combined business. With a track record of collaboration across disciplines bringing the right technology solutions to its blue-chip clients’ business and marketing challenges, the combined company’s network also brings experience in building and developing its own proprietary digital products to solve for gaps in the marketing ecosystem, which together could generate $90 - $150 million annual top-line benefit over time.
“Having thoroughly evaluated the Transaction and having received the recommendation of the Special Committee, which, in close collaboration with its independent legal and financial advisors, met extensively to assess, evaluate and negotiate the Transaction - we are pleased to have reached a definitive agreement that maximizes growth potential for MDC and opportunity for all stakeholders,” said Irwin D. Simon, Presiding Director of MDC Partners and Chair of the Special Committee of MDC Partners’ Board of Directors. “MDC boasts a rich history and culture of entrepreneurship while innovating to solve for core client and industry needs. Combining these two companies will build on that legacy to create an even stronger industry leader.”
Highly Compelling Strategic Rationale
In contrast to MDC remaining a standalone company, the highly compelling combination creates a leading marketing services company with enhanced global scale and broadened premium capabilities highlighted by the following strategic rationale:
Strategic Advantages of Combined Company:
| · | Targeting 5%+ annual organic growth, driven by 10-15% digital marketing growth and complementary capabilities, and 9%+ total annual revenue growth including new products and acquisitions |
| · | Media and data operation managing $4.4 billion in media spend, bringing added scale and sophistication |
| · | New revenue streams from expanded digital and technology products |
| · | More than tripling high-growth digital offerings, with 32% of business in digital services |
| · | Enhanced global scale across 23 countries |
| · | Leadership team with experience in value creation in marketing services |
| · | Expanded opportunities for high-performing network talent |
Financial Strength:
| · | Run-rate savings of ~$30 million from operational synergies over time, with ~90% expected to be achieved within 24 months |
| · | Enhanced capital structure, decreasing net leverage ratio from 4.2x to 3.4x, after giving full effect to run-rate operational synergies |
| · | Over $200m of pro forma cash generation in 2021 |
| · | Target to grow to $3 billion+ in revenue in 2025, including acquisitions, organic growth and new products |
Governance and Management
Mark Penn, current CEO and Chairman of MDC and Managing Partner of Stagwell, will continue as CEO and Chairman of the combined company. The management team for the combined company will consist of existing executives from both MDC and Stagwell.
Pursuant to the Transaction Agreement, the board of directors of the combined company will consist of nine members, including Mark Penn and Bradley Gross. Three independent directors on the Board will continue as directors in the combined company and the combined company shall cause such directors to be nominated at the company’s next two annual meetings; Stagwell will be entitled to designate the other four directors to serve on the Board.
The combined company will remain headquartered in New York, NY and will maintain a significant presence in Washington D.C.
Transaction Structure
Under the terms of the Transaction Agreement, the Transaction will be effected using an “Up-C” partnership structure, to permit additional basis step-up and depreciation for the combined company. Pursuant to the Transaction, MDC will be converted into a limited liability company that holds both Stagwell’s subsidiaries and MDC’s operating assets and Stagwell will contribute its operating businesses to MDC as so converted. The limited liability company will be owned in part by a newly-formed NASDAQ-listed company incorporated in Delaware (“New MDC”), and in part by Stagwell. On a pro forma basis, without giving effect to any conversion of outstanding preference shares of MDC, the pre-Transaction holders of MDC Shares would own 26% of the common equity of New MDC and Stagwell shareholders would be issued shares of a new Class C series equivalent to 74% of the common equity of New MDC and exchangeable into shares of New MDC Class A Shares on a one-for-one basis at Stagwell’s election.
Additionally, MDC and Stagwell will enter into a tax receivable agreement pursuant to which New MDC and Stagwell will share in the economic benefits of tax attributes resulting from Stagwell’s exchanges of “Up-C” units.
Concurrently with the execution of the Transaction Agreement, MDC and an affiliate of Goldman Sachs, as sole holder, agreed to renegotiate the terms of MDC’s issued and outstanding Series 4 convertible preference shares (the “Goldman Amendments”). The revised terms reduce the conversion price from $7.42 to $5.00 and extend accretion for two years at a reduced rate of 6%. In connection with the Transaction, an affiliate of Goldman Sachs, as holder, will have the right to redeem up to $30 million of its preference shares in exchange for a $25 million subordinated note or loan with a 3 year maturity (i.e., exchange at an approximately 17% discount to face value). The $25 million note or loan will accrue interest at 8.0% per annum and is pre-payable any time at par without penalty.
Subject to market conditions and other factors, MDC intends to conduct a consent solicitation for certain waivers and amendments to its 6.50% senior notes due 2024 (the “Notes”) necessary to close the Transaction. MDC has entered into consent and support agreements with holders of more than 50% of the aggregate principal amount of its Notes to consent to the necessary waivers and amendments in the consent solicitation.
Path to Completion
The Transaction is subject to customary approvals, including, but not limited to, approvals from the MDC shareholders at a special meeting called for such purpose (the “Special Meeting”), which will include the approval of (i) 66 2/3% of the votes cast by all holders of various classes of shares of MDC, as applicable, and (ii) pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), a simple majority of the votes cast by the holders of applicable classes of shares of MDC, in each instance voting separately as a class (unless relief or approval is obtained from the applicable securities regulatory authorities to permit voting as a single class), excluding the votes cast by “interested parties” for purposes of MI 61-101 (which will include Stagwell, Mark Penn, Goldman Sachs and their respective affiliates (other than MDC and its subsidiaries) and their joint actors, as applicable) or any votes otherwise excluded for purposes of the “minority approval” determined pursuant to MI 61-101. Additional detail on the process and MI 61-101 can be found below. In consideration for the Goldman Amendments, an affiliate of Goldman Sachs has agreed to consent to the Transaction and waive any conversion ratio adjustments under its MDC Series 4 Preference Shares and has agreed to vote in favor of the Transaction subject to entering into customary definitive documentation to reflect the Goldman Amendments.
Closing of the Transaction is also subject to the satisfaction of a number of other conditions customary for transactions of this nature, including the receipt of certain regulatory and stock exchange approvals. The parties are targeting a closing in the first half of calendar year 2021, subject to receipt of applicable approvals.
Further information regarding the Transaction will be contained in the information circular / proxy statement that MDC will prepare, file and send to each MDC shareholder in connection with the Special Meeting.
Following closing of the Transaction, New MDC will apply to have the Class A shares of New MDC Shares listed on Nasdaq under the same symbol as Class A shares of MDC trade today: “MDCA”.
A copy of the Transaction Agreement will be filed on MDC’s SEDAR and EDGAR profile and will be available for viewing at www.sedar.com and www.sec.gov.
Shareholder Questions
Shareholders with questions regarding the Transaction should contact Kingsdale Advisors, MDC’s strategic shareholder advisor and proxy solicitation agent, at 1-877-659-1821 (toll-free within North America) or at 1-416-867-2272 (outside of North America) or by email at contactus@kingsdaleadvisors.com.
Advisors
Moelis & Company LLC is serving as financial advisor, and Canaccord Genuity Corp. is serving as independent financial advisor, to the Special Committee of MDC’s Board of Directors, with DLA Piper LLP (US) and DLA Piper (Canada) LLP serving as legal advisor to the Special Committee of MDC’s Board of Directors. Cleary Gottlieb Steen & Hamilton LLP and Fasken Martineau DuMoulin LLP are serving as legal advisors to MDC. J.P. Morgan Securities LLC is serving as financial advisor to Stagwell, and Freshfields Bruckhaus Deringer US LLP and McCarthy Tétrault LLP are serving as legal advisors to Stagwell. Kingsdale Advisors is serving as strategic shareholder and communications advisor to MDC Partners. Sloane & Company is serving as communications advisor to MDC.
Conference Call
Management will host a conference call on Tuesday, December 22, at 8:30 a.m. (ET) to discuss its results. The conference call will be accessible by dialing 1-888-346-6216 or toll free 1-412-902-4266. An investor presentation has been posted on our website at www.mdc-partners.com and may be referred to during the conference call. A recording of the conference call will be accessible within two hours after the conference call until 12:00 a.m. (ET), December 28, 2020, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10150775).
Additional Information and Where to Find It
In connection with the Transaction, MDC and New MDC will file with the SEC a registration statement on Form S-4 (the “Form S-4”) that will include a proxy statement of MDC (the “Proxy Statement” and, together with the Form S-4, the “Proxy Statement/Prospectus”). This communication is not a substitute for the Proxy Statement/Prospectus or any other document MDC may file with the SEC in connection with the Transaction. When available, MDC will mail the Proxy Statement/Prospectus to its shareholders in connection with the votes to approve certain matters in connection with the Transaction.
INVESTORS AND SECURITYHOLDERS OF MDC ARE URGED TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS, ONCE AVAILABLE, REGARDING THE TRANSACTION IN ITS/THEIR ENTIRETY WHEN THEY BECOME AVAILABLE (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) OR ANY DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. You may obtain, free of charge, copies of the Proxy Statement/Prospectus, when available, and other relevant documents filed by MDC or New MDC with the SEC, at the SEC’s website at www.sec.gov. In addition, investors and securityholders will be able to obtain free copies of the Proxy Statement/Prospectus and other relevant documents filed by MDC or New MDC with the SEC and from MDC’s website at http://www.mdc-partners.com.
The URLs in this announcement are intended to be inactive textual references only. They are not intended to be active hyperlinks to websites. The information on such websites, even if it might be accessible through a hyperlink resulting from the URLs or referenced herein, is not and shall not be deemed to be incorporated into this announcement. No assurance or representation is given as to the suitability or reliability for any purpose whatsoever of any information on such websites.
No Offer or Solicitation
This communication does not constitute an offer to buy or exchange, or the solicitation of an offer to sell or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This communication is not a substitute for any prospectus, proxy statement or any other document that MDC or New MDC may file with the SEC in connection with the proposed transaction. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.
No offering of securities shall be made except by means of a prospectus meeting the requirements of the U.S. Securities Act of 1933, as amended. The transaction and distribution of this document may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No offering of securities will be made directly or indirectly, in or into any jurisdiction where to do so would be inconsistent with the laws of such jurisdiction.
Board Approval and MI 61-101 Matters
The Board formed a committee (the “Special Committee”) comprised of independent (for purposes of MI 61-101) directors to, among other things, review and evaluate the strategic alternatives available to MDC, including the Transaction, and to negotiate, consider and evaluate such strategic alternatives. As a result of its process, and after receipt of (i) a fairness opinion from Moelis & Company LLC, exclusive financial advisor to the Special Committee in respect of the Transaction, providing that, as of the date thereof and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the percentage ownership of New MDC to be held by the holders of MDC Class A and Class B shares (together, the “MDC Common Shares”) upon completion of the Transaction is fair, from a financial point of view, to the holders of MDC Common Shares, other than Mark Penn, Stagwell, Goldman Sachs and their respective affiliates (other than MDC and its subsidiaries) (collectively, the “interested shareholders”), and (ii) a formal valuation for purposes of MI 61-101 (the “Valuation”) from Canaccord Genuity Corp. (“Canaccord Genuity”), independent financial advisor to the Special Committee, and (iii) an independent fairness opinion from Canaccord Genuity, providing that as of the date of the Transaction Agreement, and based upon and subject to the limitations and assumptions set forth therein, and such other matters as Canaccord Genuity considered relevant, the consideration to be paid by MDC for the Stagwell Subject Entities pursuant to the Transaction Agreement is fair, from a financial point of view, to the holders of MDC Class A shares (other than Mark Penn, Stagwell, Goldman Sachs and their Affiliates), and, the Special Committee determined, after consultation with its financial and legal advisors, among other things, that it is in the best interest of MDC and its shareholders (other than the interested holders), and declared it advisable, to recommend that MDC enter into the Transaction Agreement and consummate the Transaction.
The Board, after receipt of the unanimous recommendation of the Special Committee, (i) unanimously determined (with Mark Penn, Charlene Barshefsky and Bradley Gross abstaining from voting on, or participating in any deliberations with respect to the Transaction) that it is in the best interests of MDC and its shareholders (other than the interested shareholders), and declared it advisable, to enter into the Transaction Agreement and consummate the Transaction, (ii) approved the execution, delivery and performance by MDC of the Transaction Agreement, and the consummation of the Transaction, and (iii) resolved to recommend that the shareholders of MDC vote for the resolutions necessary to approve the Transaction.
The Transaction will constitute a “business combination” for purposes of MI 61-101 and, in accordance with the requirements of MI 61-101, the Valuation was obtained by, and prepared under the supervision of, the Special Committee. The results of the Valuation will be provided to shareholders in the proxy circular to consider the Transaction. Additional details regarding the requirements of MI 61-101 will be provided in the Proxy Statement/Prospectus, to the extent required.
Cautionary Statement Regarding Forward-Looking Statements
This communication may contain certain forward-looking statements (collectively, “forward-looking statements”) within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended and Section 21E of the U.S. Exchange Act and the United States Private Securities Litigation Reform Act of 1995, as amended, and “forward-looking information” under applicable Canadian securities laws. Statements in this document that are not historical facts, including statements about MDC’s or Stagwell’s beliefs and expectations and recent business and economic trends, constitute forward-looking statements. Words such as “estimate,” “project,” “target,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “create,” “intend,” “could,” “should,” “would,” “may,” “foresee,” “plan,” “will,” “guidance,” “look,” “outlook,” “future,” “assume,” “forecast,” “focus,” “continue,” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section. Such forward-looking statements may include, but are not limited to, statements related to: future financial performance and the future prospects of the respective businesses and operations of MDC, Stagwell and the combined company; information concerning the proposed business combination with subsidiaries of Stagwell (the “Transaction”); the anticipated benefits of the Transaction; the likelihood of the Transaction being completed; the anticipated outcome of the Transaction; the tax impact of the Transaction on MDC and shareholders of MDC; the timing of the Special Meeting the shareholder approvals required for the Transaction; regulatory and stock exchange approval of the Transaction; and the timing of the implementation of the Transaction. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement, including the risks identified in our filings with the SEC.
These forward-looking statements are subject to various risks and uncertainties, many of which are outside MDC’s control. Important factors that could cause actual results and expectations to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled “Risk Factors” in the Proxy/Prospectus, and under the caption “Risk Factors” in MDC’s Annual Report on Form 10-K for the year-ended December 31, 2019 under Item 1A, in MDC’s Quarterly Report on Form 10-Q for the three-months ended March 31, 2020 under Item 1A, in MDC’s Quarterly Report on Form 10-Q for the six-months ended June 30, 2020 under Item 1A and in MDC’s Quarterly Report on Form 10-Q for the nine-months ended September 30, 2020. These and other risk factors include, but are not limited to, the following:
| · | an inability to realize expected benefits of the Transaction or the occurrence of difficulties in connection with the Transaction; |
| · | adverse tax consequences in connection with the Transaction for MDC, its operations and its shareholders, that may differ from the expectations of MDC or Stagwell, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on MDC’s determination of value and computations of its tax attributes may result in increased tax costs; |
| · | the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transaction; |
| · | the impact of uncertainty associated with the Transaction on MDC’s and Stagwell’s respective businesses; |
| · | direct or indirect costs associated with the Transaction, which could be greater than expected; |
| · | the risk that a condition to completion of the Transaction may not be satisfied and the Transaction may not be completed; and |
| · | the risk of parties challenging the Transaction or the impact of the Transaction on MDC’s debt arrangements. |
You can obtain copies of MDC’s filings under its profile on SEDAR at www.sedar.com, its profile on the SEC’s website at www.sec.gov or its website at www.mdc-partners.com. MDC does not undertake any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as expressly required by law. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.
Participants in the Solicitation
MDC, New MDC and their respective directors and executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from MDC’s shareholders with respect to the approvals required to complete the proposed Transaction. More detailed information regarding the identity of these potential participants, and any direct or indirect interests they may have in the proposed transaction, by security holdings or otherwise, will be set forth in the Proxy Statement/Prospectus when filed with the SEC. Information regarding MDC’s directors and executive officers is set forth in the definitive proxy statement on Schedule 14A filed by MDC with the SEC on May 26, 2020 and in the Annual Report on Form 10-K filed by MDC with the SEC on March 5, 2020. Additional information regarding the interests of participants in the solicitation of proxies in respect of the Special Meeting will be included in the Proxy Statement/Prospectus to be filed with the SEC. These documents are available to the shareholders of MDC free of charge from the SEC’s website at www.sec.gov and from MDC’s website at www.mdc-partners.com.
You must not construe the contents of this document as legal, tax, regulatory, financial, accounting or other advice, and you are urged to consult with your own advisors with respect to legal, tax, regulatory, financial, accounting and other consequences of the Transaction, the suitability of the Transaction for you and other relevant matters concerning the Transaction.
ABOUT MDC Partners
MDC Partners is one of the most influential marketing and communications networks in the world. As "The Place Where Great Talent Lives," MDC Partners is celebrated for its innovative advertising, public relations, branding, digital, social and event marketing agency partners, which are responsible for some of the most memorable and effective campaigns for the world's most respected brands. By leveraging technology, data analytics, insights and strategic consulting solutions, MDC Partners drives creative excellence, business growth and measurable return on marketing investment for over 1,700 clients worldwide. For more information about MDC Partners and its partner firms, visit our website at www.mdc-partners.com and follow us on Twitter at http://www.twitter.com/mdcpartners.
ABOUT The Stagwell Group
The Stagwell Group is the first and only independent, digital-first, and fully-integrated organization of size & scale servicing brands across the continuum of marketing services. Collaborative by design, Stagwell is not weighed down by legacy points of view and its people are united in their desire to innovate, evolve, grow and deliver superior results for their clients. Stagwell’s high growth brands include experts in four categories: digital transformation and marketing, research and insights, marketing communications, and content and media. The address of Stagwell is 1808 Eye Street, Floor 6, Washington, D.C., 20006.
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Exhibit 99.2
TRANSFORMING MARKETING
Cautionary Statement Regarding Forward - Looking Statements This communication may contain certain forward - looking statements (collectively, “forward - looking statements”) within the meanin g of Section 27A of the U.S. Securities Act of 1933, as amended and Section 21E of the U.S. Exchange Act and the United States Private Securities Litigation Reform Act of 1995, as amended, and “forward - looking information” under appl icable Canadian securities laws. Statements in this document that are not historical facts, including statements about MDC’s or Stagwell’s beliefs and expectations and recent business and economic trends, constitute forward - looking statement s. Words such as “estimate,” “project,” “target,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “create,” “intend,” “could,” “should,” “would,” “may,” “foresee,” “plan,” “will,” “guidance,” “look,” “outlook,” “future,” “assume,” “f ore cast,” “focus,” “continue,” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors , i ncluding those outlined in this section. Such forward - looking statements may include, but are not limited to, statements related to: future financial performance and the future prospects of the respective businesses and operations of M DC, Stagwell and the combined company; information concerning the proposed business combination with subsidiaries of Stagwell (the “Proposed Transactions”); the anticipated benefits of the Proposed Transactions; the likelihood of the Proposed Transactions being completed; the anticipated outcome of the Proposed Transactions; the tax impact of the Proposed Transactions on MDC and shareholders of MDC; the timing of the Special Meeting the shareholder approva ls required for the Proposed Transactions; regulatory and stock exchange approval of the Proposed Transactions; and the timing of the implementation of the Proposed Transactions. A number of important factors could cause ac tua l results to differ materially from those contained in any forward - looking statement, including the risks identified in our filings with the SEC. These forward - looking statements are subject to various risks and uncertainties, many of which are outside MDC’s control. Impor tant factors that could cause actual results and expectations to differ materially from those indicated by such forward - looking statements include, without limitation, the risks and uncertainties set forth under the section entitled “Risk F actors” in the Proxy/Prospectus, and under the caption “Risk Factors” in MDC’s Annual Report on Form 10 - K for the year - ended December 31, 2019 under Item 1A, in MDC’s Quarterly Report on Form 10 - Q for the three - months ended March 31, 2020 und er Item 1A, in MDC’s Quarterly Report on Form 10 - Q for the six - months ended June 30, 2020 under Item 1A and in MDC’s Quarterly Report on Form 10 - Q for the nine - months ended September 30, 2020. These and other risk factors in clude, but are not limited to, the following: an inability to realize expected benefits of the Proposed Transactions or the occurrence of difficulties in connection with the Proposed Transactions; adverse tax consequences in conn ect ion with the Proposed Transactions for MDC, its operations and its shareholders, that may differ from the expectations of MDC or Stagwell, including that future changes in tax law, potential increases to corporate tax rates in the Uni ted States and disagreements with the tax authorities on MDC’s determination of value and computations of its tax attributes may result in increased tax costs; the occurrence of material Canadian federal income tax (including material “em igration tax”) as a result of the Proposed Transactions; the impact of uncertainty associated with the Transaction on MDC’s and Stagwell’s respective businesses; direct or indirect costs associated with the Proposed Transactions, which coul d b e greater than expected; the risk that a condition to completion of the Proposed Transactions may not be satisfied and the Proposed Transactions may not be completed; and the risk of parties challenging the Proposed Transactions o r t he impact of the Proposed Transactions on MDC’s debt arrangements. You can obtain copies of MDC’s filings under its profile on SEDAR at www.sedar.com , its profile on the SEC’s website at www.sec.gov or its website at www.mdc - partners.com . MDC does not undertake any obligation to update any forward - looking statements as a result of new information, future developments or otherwise, except as expressly required by law. All fo rward - looking statements in this communication are qualified in their entirety by this cautionary statement. No Offer or Solicitation This presentation does not constitute an offer to buy or exchange, or the solicitation of an offer to sell or exchange, any s ecu rities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such j uri sdiction. This presentation is not a substitute for any prospectus, proxy statement or any other document that MDC or a newly - formed company (“New MDC”) may file with the SEC in connection with the Proposed Transactions. No money, securities o r other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted. No offering of securities shall be made except by means of a prospectus meeting the requirements of the U.S. Securities Act o f 1 933, as amended. The Proposed Transactions and distribution of this presentation may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein should inform th ems elves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No offering of securities will be made directly or indirectly, in or into any jurisdiction where to do so would be inconsistent with the laws of such jurisdiction. FORWARD LOOKING INFORMATION & OTHER INFORMATION 2
Additional Information and Where to Find It In connection with the Proposed Transactions, MDC and New MDC will file with the SEC a registration statement on Form S - 4 (the “ Form S - 4”) that will include a proxy statement of MDC (the “Proxy Statement” and, together with the Form S - 4, the “Proxy Statement/Prospectus”). This presentation is not a substitute for the Proxy Statement/Prospectus or other document MDC may file with the SEC in connection with the Proposed Transactions. When available, MDC will mail the Proxy Statement/Pro spe ctus to its shareholders in connection with the votes to approve certain matters in connection with the Proposed Transactions. INVESTORS AND SECURITYHOLDERS OF MDC ARE URGED TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS, ONCE AVAILABLE, REGARDING TH E P ROPOSED TRANSACTIONS IN ITS/THEIR ENTIRETY WHEN THEY BECOME AVAILABLE (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) OR ANY DOCUME NTS WHICH ARE INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOS ED TRANSACTIONS. You may obtain, free of charge, copies of the Proxy Statement/Prospectus, when available, and other relevant documents filed by MDC or New MDC with the SEC, at the SEC’s website at www.sec.gov. In addition, investors and securityholders will be able to obtain free copies of the Proxy Statement/Prospect us and other relevant documents filed by MDC or New MDC with the SEC and from MDC’s website at http://www.mdc - partners.com. The URLs in this announcement are intended to be inactive textual references only. They are not intended to be active hyperli nks to websites. The information on such websites, even if it might be accessible through a hyperlink resulting from the URLs or referenced herein, is not and shall not be deem ed to be incorporated into this announcement. No assurance or representation is given as to the suitability or reliability for any purpose whatsoever of any information on su ch websites. Participants in the Solicitation MDC, New MDC and their respective directors and executive officers and other members of management and employees, may be deem ed to be participants in the solicitation of proxies from MDC’s shareholders with respect to the approvals required to complete the Proposed Transactions. More detailed informati on regarding the identity of these potential participants, and any direct or indirect interests they may have in the Proposed Transactions, by security holdings or otherwise, will be s et forth in the Proxy Statement/Prospectus when filed with the SEC. Information regarding MDC’s directors and executive officers is set forth in the definitive proxy statement on Schedule 14A filed by MDC with the SEC on May 26, 2020 and in the Annual Report on Form 10 - K filed by MDC with the SEC on March 5, 2020. Additional information regarding the interests of partici pants in the solicitation of proxies in respect of the Special Meeting will be included in the Proxy Statement/Prospectus to be filed with the SEC. These documents are available to th e shareholders of MDC free of charge from the SEC’s website at www.sec.gov and from MDC’s website at www.mdc - partners.com. You must not construe the contents of this document as legal, tax, regulatory, financial, accounting or other advice, and you ar e urged to consult with your own advisors with respect to legal, tax, regulatory, financial, accounting and other consequences of the Proposed Transactions, the suitability of the Pro posed Transactions for you and other relevant matters concerning the Proposed Transactions. FORWARD LOOKING INFORMATION & OTHER INFORMATION (CONT’D) 3
Pro Forma Financial Information The unaudited pro forma financial information contained in this presentation has been prepared for illustrative purposes only an d is not necessarily indicative of the operating results or financial position that would have been achieved if the Proposed Transactions or other pro forma adjustments had been comp let ed on the dates or for the periods presented, nor does the pro forma financial information purport to project the results of operations or financial position for Stagwell or result ing from the Proposed Transactions for any future period or as of any future date. The pro forma financial information is based upon currently available information and the estimates and assu mpt ions of MDC’s and Stagwell’s respective managements as described herein. In addition, the pro forma financial information presented in this presentation does not comply with the re qui rements of the SEC. It is expected that pro forma financial information in compliance with those requirements relating to the Proposed Transactions will be contained in a registration s tat ement and/or proxy statement to be filed with the SEC. That pro forma information could differ materially from the pro forma information contained in this presentation. Use of Projections This presentation contains projected financial information with respect to the combined company, including revenue, EBITDA, a dju sted EBITDA and cash generation. Such projected financial information constitutes forward - looking statements and should not be relied upon as being necessarily indicative of fu ture results and are for illustrative purposes only. The assumptions and estimates underlying the prospective financial information are inherently uncertain and are subject to a wide va riety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projected financial inf ormation in this presentation. Neither the independent auditors of MDC nor the independent auditors of Stagwell audited, reviewed, compiled or performed any procedures with respect to the p roj ected financial information for the purpose of their inclusion in this presentation and, accordingly, neither of them expressed an opinion or provided any other form of assurance wi th respect thereto for the purpose of this presentation. Industry and Market Data This presentation includes information and statistics regarding market participants in the sectors in which MDC and Stagwell com pete and other industry data which was obtained from third - party sources, including reports by market research firms and company filings. Trademarks This presentation may contain trademarks, service marks, trade names and copyrights of other companies, which are the propert y o f their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this presentation may be listed without the TM, SM© or ®, but MDC and Stagwell will assert, to the fullest extent under applicable law, the rights of the applicable owners, if any, of these trademarks, service marks, tra de names and copyrights. FORWARD LOOKING INFORMATION & OTHER INFORMATION (CONT’D) 4
Non - GAAP Financial Measures The presentation includes certain financial measures that the SEC defines as “non - GAAP financial measures.” MDC’s and Stagwell’s respective managements believe that such non - GAAP financial measures, when read in conjunction with the results reported in accordance with generally accepted accounting princ ipl es (“GAAP”), can provide useful supplemental information for investors analyzing period - to - period comparisons of MDC’s and Stagwell’s results. Such non - GAAP financial measures include the following: Adjusted EBITDA (MDC): Adjusted EBITDA is a non - GAAP financial measure that represents net income (loss) attributable to MDC Par tners Inc. common shareholders, plus or minus adjustments to operating income (loss) plus depreciation and amortization, stock - based compensation, deferred acquisition consideration adjustments, dist ributions from non - consolidated affiliates, and other items, net which includes items such as severance expense and other restructuring expenses, including costs for leases that will either be terminated o r s ublet in connection with the centralization of MDC’s New York real estate portfolio. Covenant EBITDA (MDC): Covenant EBITDA is a measure that includes pro forma adjustments for acquisitions, one - time charges, perm itted dispositions and other items, as defined in MDC’s Credit Agreement. MDC believes that the presentation of Covenant EBITDA is useful to investors as it eliminates the effect of certain non - cash and other items not necessarily indicative of a company’s underlying operating performance. In addition, the presentation of Covenant EBITDA provides additional information to investors about the calculat ion of, and compliance with, certain financial covenants in MDC’s Credit Agreement. Adjusted EBITDA (Stagwell): Adjusted EBITDA is a non - GAAP financial measure that represents Stagwell’s net income plus (minus) interest, taxes, depreciation and amortization, transaction costs and normalized purchase price accounting adjustments, DAC, the fair market value adjustments of financial instruments and real estate restru ctu ring costs for certain brands, and other non - recurring items. Adjusted EBITDA (Stagwell) is based on Stagwell's financials and other adjustments based on reports by MDC third party accounting advisors. Pro Forma Cash Generation is a non - GAAP measure defined as Adjusted EBITDA with run rate synergies less capital expenditures, ch ange in net working capital, cash taxes, interest, and distributions to minority interests, but excluding contingent M&A payments. We are unable to reconcile our and Stagwell’s Revenue and pro forma Revenue to the corresponding GAAP measures because among oth er things we are unable to estimate the contemplated transaction’s impact on the timing and magnitude of revenue recognition as well as fluctuations to foreign exchange rates and the potential oc currence or impact of any acquisitions, dispositions, or other potential changes. We are unable to reconcile projected EBITDA and pro forma Adjusted EBITDA to the corresponding GAAP measures because of the i nab ility to estimate the timing and magnitude of revenue as described above as well as the amortization of intangible assets and income tax affects resulting from the transaction or otherwise without u nre asonable effort, if at all. As a result, we are unable to provide reconciliations of these measures. In addition, we believe such reconciliations could imply a degree of precision that might be confusing or misleadin g t o investors. For the same reasons, we are unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impac t o n future GAAP financial results. Included in the presentation are tables reconciling MDC’s and Stagwell’s reported results to these non - GAAP financial measures. Actuals may not foot due to rounding. FORWARD LOOKING INFORMATION & OTHER INFORMATION (CONT’D) 5
BETTER TOGETHER “The combination unites the award - winning talent of MDC with the advanced technology platform of Stagwell. Together, we become the transformative company that modern marketers need.” MARK PENN Chairman & CEO 6
7 Combined company with targets of 5%+ annual organic growth , driven by 10 - 15% digital marketing growth and complementary capabilities, and 9%+ total annual revenue growth including new products and acquisitions Integrated services driving $30M in cost synergies , with ~90% achieved in the first 24 months Media and data operation managing $4.4B in media, bringing added scale and sophistication New revenue streams from expanded digital and technology products contributing up to $75M in growth over time Improved balanced sheet, decreasing net leverage ratio from 4.2x to 3.4x after giving full effect to run rate synergies Over $200M of pro forma cash generation in 2021, providing ample liquidity for reducing balance sheet liabilities and investing in growth Leadership team bringing experience in value creation in marketing services 1 2 3 4 5 6 7 BETTER TOGETHER TODAY ONE COMPANY THAT TOGETHER HAS THE TALENT + TECHNOLOGY TO WIN IN THE MARKETPLACE
BETTER TOGETHER ($ M ) 8 MDC 2020 Est. Stagwe ll 2020 PF Est. REVENUE: $890 ADJ. EBITDA: $138 COUNTRIES: 20 EMPLOYEES: 3,775 REVENUE: $1,180 ADJ. EBITDA: $180 COUNTRIES: 14 EMPLOYEES: 4,900 2021 PF Projections 2020 PF Est. REVENUE: $2,065 – 2,075 ADJ. EBITDA 1 : $345 – 350 REVENUE: $2,095 – 2,135 ADJ. EBITDA 1 : $355 – 370 Note: Refer s to midpoint of guidance on slide 28. Stagwell financials are pro forma for certain in - period acquisitions and other adjustments based on reports from MDC third party accounting advisors. The Company has excluded a quantitative reconciliation with respect to the Company’s 2020 guidance under the “unreasonable ef for ts” exception in Item 10(e)(1)(i)(B) of Regulation S - K 1 Assumes ~$30 million of cost savings. Does not include costs to achieve. Synergies expected to be fully realized by year 3. S ee slide 30.
9 Equation for Success ($M) 2025 Combined Organic Revenue Growth $2,600 + New Digital Revenue Streams $75 + M&A Growth $325 = TARGET GOAL $3,000 $3 BILLION+ OF REVENUE IN 2025 THROUGH COMBINATION OF ORGANIC, NEW REVENUE STREAMS & ACQUISITIONS OPPORTUNITY TO GROW TO BETTER TOGETHER TOMORROW See slide 32 for detailed assumptions.
10 STAGWELL MDC BOTH AS OF 6.30.20 Cities 42 49 67 Countries 14 20 23 Employees 4,900 3,775 8,675 BETTER TOGETHER: MDC & STAGWELL’S COMBINED PRESENCE SPANS 23 COUNTRIES AND 67 CITIES
11 THE MARKETPLACE The combination brings together the right mix of talent + technology Consulting firms lack essential creative talent JUST RIGHT FOR THE TIMES Legacy holding companies grew too big
12 COMBINATION OFFERS THE INTEGRATED SOLUTIONS NEEDED TO TRANSFORM MARKETING LEADERSHIP THAT BRINGS IT ALL TOGETHER INTO ONE SYNERGISTIC OFFERING Second - to - None Creativity & Communications Blue Chip Customer Base Precision Media & Data Capabilities Addressable on a Global Scale Rigorous Consumer Insights & Strategy Tracking Across Consumer Journey Results - Driven Technology & Digital Transformation New Products and Revenue Streams 1 2 3 4
13 SECOND - TO - NONE CREATIVITY & COMMUNICATIONS IMPACTFUL WORK SHAPING CULTURE & CONVERSATION 19 EMMY AWARDS 129 333 396
14 SECOND - TO - NONE CREATIVITY & COMMUNICATIONS HIGH GROWTH AREAS OF ISSUE COMMUNICATIONS, DIGITAL FUNDRAISING & CRISIS MANAGEMENT 162 candidates represented across parties, $222M in placed media & over $720M raised across 17.5M transactions in 2020 alone
SECOND - TO - NONE CREATIVITY & COMMUNICATIONS BLUE CHIP CUSTOMER BASE Communications / Media Retail Food & Beverage Consumer Products Technology Automotive Financial Services Healthcare 15
16 PRECISION MEDIA & DATA CAPABILITIES A $4.4 BILLION INTEGRATED MEDIA & DATA POWERHOUSE FOR THE POST - COOKIE WORLD 2,000+ media experts across 40+ global offices
17 PRECISION MEDIA & DATA CAPABILITIES SCALED CREATIVE PEFORMANCE THE COMBINATION CREATES SOMETHING NEW IN THE MARKETPLACE: A FORMIDABLE CONTENDER PURPOSE - BUILT TO SCALE CREATIVE PERFORMANCE Our data - fueled media and content practice will invest to lead the industry in addressable media. By scaling creative performance, we will be able to build brands with mass precision. 488% Increase In Search Volume For Brand Terms 0.81% CTR 600% Increase In App Downloads Compared to Another In - House Channel 963% Increase In First Trips Compared to Another In - House Channel 1,230% Growth in Conversions From Organic Visitors 99.7% Decrease In CPI From 710,000KRW to 2,500KRW 15,025% Increase In Conversions From Paid Ads
18 Polling in 12 countries each week 5 million surveys a year across all consumer touchpoints RIGOROUS CONSUMER INSIGHTS & STRATEGY CONNECTING DATA ACROSS POLLING, BEHAVIOR, RETAIL, WEB & MEDIA TO UNDERSTAND CONSUMERS Snap, NRG Study: Gen Z, Millennials Gravitate Toward Short - Form Premium Video Content 2020+ Rise of Premium Mobile Video PERCENT OF GEN Zs AND MILLENIALS WHO WATCH MOBILE VIDEO DAILY
19 RIGOROUS CONSUMER INSIGHTS & STRATEGY UNIQUE & ACCURATE DATA HARRIS POLL PRODUCED THE SINGLE LARGEST TRACKER OF COVID CONSUMER SENTIMENT Source: https://americanresearchgroup.com/ratings/2020/USPres.html & THE MOST ACCURATE PRESIDENTIAL POLL
20 RESULTS - DRIVEN TECHNOLOGY & DIGITAL TRANSFORMATION GLOBALLY SCALED DESIGN, DEVELOPMENT & IMPLEMENTATION ACROSS PLATFORMS 24/7 scaled global engineering teams with over 600 engineers
RESULTS - DRIVEN TECHNOLOGY & DIGITAL TRANSFORMATION GREATER CONTRIBUTION FROM HIGH GROWTH DIGITAL SERVICES REVENUE (% 2019 Revenue) Advertising 59% DIGITAL SERVICES 9% Media 7% Other 9% Advertising 37 % Marketing Comm. / PR 16% DIGITAL SERVICES 32% Media 4 % Other 6% Research 6 % Marketing Comm. / PR 16% BUSINESS MIX DEEPENED EXPERTISE IN DIGITAL SERVICES 21 (% 2020E Revenue) Note: Does not reflect MDC or Stagwell reported segments. Stagwell includes digital media and fundraising assets in Digital Service s; MDC includes digital media assets in Media.
RESULTS - DRIVEN TECHNOLOGY & DIGITAL TRANSFORMATION NEW PRODUCTS & REVENUE STREAMS Audience identification and activation I nfluencer management platform AI for public relations pros Mobile device usage and behavior Modern brand management Online reputation management Transformational media execution Traveler targeting across channels Content revenue maximization 22
LEADERSHIP TEAM WITH EXPERIENCE IN VALUE CREATION AND MARKETING SERVICES MARK PENN HAS OVER 45 YEARS OF SUCCESSFUL OPERATING EXPERIENCE AND INDUSTRY EXPERTISE 23 Founder & Pollster Founded Penn and Schoen in 1975 with his Harvard roommate Doug Schoen Grower Under Penn’s leadership, firm expanded to 200+ people with offices around the world Served key corporate (Texaco, AT&T, Microsoft, Ford, Merck, etc.) & political (President Clinton’s pollster for six years, advisor to Hillary Clinton & Tony Blair) clients Seller Penn & his partners sold PSB to WPP in November 2001 after growing it from a mom - and - pop political polling firm to $80M+ in reve nue Global CEO Served as CEO of Burson - Marsteller from 2006 – 2012, running a global PR and public affairs firm with an 80+ market footprint and tripling profits Client & Creator Asked by Steve Ballmer to join Microsoft & revitalize Bing in 2012; rose to EVP & Chief Strategy Officer running Microsoft’s $2 billion advertising budget Portfolio Builder & Public Company CEO Launched Stagwell Group in 2015; invested in MDC in 2019 & assumed role of Chairman & CEO MARK PENN Chairman & CEO EXECUTIVE LEADERSHIP EXECUTIVE LEADERSHIP David Ross Legal & Strategy Jay Leveton Business & Strategy Frank Lanuto Finance Beth Sidhu Operations Jason Reid Investment Ryan Linder New Business Julia Hammond Global Clients Anas Ghazi Growth Markets Alex Delanghe Communications Alexis Williams Brand Ryan Greene Finance
FINANCIAL DETAIL 24
25 STAGWELL: A PROVEN PLATFORM FOR GROWTH & ACQUISITIONS $294 $426 $629 2017A 2018A 2019A 2020 PF Est. $ in millions GAAP REVENUE 2015 & 2016 $890 25 Note: Stagwell financials are pro forma for certain in - period acquisitions and other adjustments based on reports from MDC third party accounting advisors.
26 STAGWELL: A COMPREHENSIVE SUITE OF DIGITAL - FIRST MARKETING SOLUTIONS RESEARCH & INSIGHTS CONTENT & MEDIA MARKETING COMMUNICATIONS DIGITAL TRANSFORMATION & MARKETING 42% of 2020 PF Est. Revenue 40% of 2020 PF Est. Revenue 13% of 2020 PF Est. Revenue 5% of 2020 PF Est. Revenue $890M 2020 PF Est. GAAP REVENUE Note: Stagwell financials are pro forma for certain in - period acquisitions and other adjustments based on reports from MDC third party accounting advisors.
EXPANDING COVENANT EBITDA (LTM) MDC: GROWING PROFITABILITY & DECLINING LEVERAGE RATIO 1 Indicates fair value of M&A obligations 2 Represents aggregate of contingent payments and fixed payments balances 3 Total leverage calculation, as defined under the credit agreement, includes issued but undrawn letters of credit of $18.6M an d $ 15.0M of cash held in depository accounts (not the entire cash balance of $37.1M) ($ in millions) 27 Total Leverage Ratio 5.0x 5.1x 4.9x 5.0x 4.5x 4.3x 4.6x 4.4x Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20³ $205 $347 $230 $122 $84 $75 $46 $195 $69 $60 $63 $52 $37 $25 $93 $79 $66 $58 $65 $40 $40 $493 $496 $355 $243 $200 $152 $112 2014 2015 2016 2017 2018 2019 Q3 2020 Deferred Acquisition Cost Balance² Redeemable NCI Non - Redeemable NCI DECLINING M&A OBLIGATIONS¹ DELIVERING LOWER LEVERAGE 3 Covenant EBITDA 4 4 4 4 4 4 4 4
Pro Forma ($M) 2020 E 2021 E Revenue 2,065 – 2,075 2,095 – 2,135 Adjusted EBITDA 315 – 320 325 – 340 Plus: Run Rate Synergies 1 30 30 Adjusted EBITDA with Run Rate Synergies 345 – 350 355 – 370 % Margin 17% 17% Pro Forma Cash Generation 2 200 – 220 % Conversion (mid - point) 58% Note: Stagwell financials are pro forma for certain in - period acquisitions and other adjustments based on reports from MDC third party accounting advisors. The Company has excluded a quantitative reconciliation with respect to the Company’s 2020 guidance under the “unreasonable ef for ts” exception in Item 10(e)(1)(i)(B) of Regulation S - K 1 Assumes ~$30 million of cost savings. Does not include costs to achieve. Synergies expected to be fully realized by year 3. Se e slide 30. 2 Pro Forma Cash Generation defined as Adjusted EBITDA with run rate synergies less capital expenditures, change in net worki ng capital, cash taxes, interest, and distributions to minority interests, but excluding contingent M&A payments 28 WHAT WE CAN BUILD TOGETHER: POWERFUL GROWTH & CASH GENERATION
WHAT WE CAN BUILD TOGETHER: AN ENHANCED CREDIT PROFILE TRANSACTION REDUCES LEVERAGE BY ~1X SYNERGY IMPACT $ in millions, LTM as of 9/30/20 (unaudited) Revenue $1,253 1 $797 $2,050 Adj. EBITDA (Incl. Synergies) $199 2 $117 $316 ($346) Net Debt $833 4 $256 5 $1,181 6 Note: Assumes ~$30 million of cost savings. Does not include costs to achieve. Synergies expected to be fully realized by yea r 3 . See slide 30. 1 Unless otherwise noted, MDC figures for revenue as reported and does not adjust for divestitures. 2 MDC Covenant EBITDA. 3 Net leverage calculation excludes issued but undrawn letters of credit of $18.6M and includes all $37.1M of cash on balance s he et as of 9/30/20. 4 Includes $870M of Senior Notes less $37M of Cash. Excludes Deferred Acquisition Costs and Minority Investments. 5 Includes $217M of RCF, $90M of TLA, less $51M of Cash. Excludes Deferred Acquisition Costs and Minority Investments. 6 Includes ~$66M of illustrative transaction fees & expenses and $25M of Subordinated Notes. 29 4.2x 3 3.4x 3.7x
Corporate 9% T&E 5% Shared Services 16% Media 32% Production 10% Research 12% Real Estate 9% Other 1 7% Annualized Cost Synergies ~55% Expected To Be Realized by Year 1 ~9 0 % Expected To Be Realized by Year 2 100% Expected To Be Realized by Year 3 $30 MILLION ~ WHAT WE CAN BUILD TOGETHER: COST SYNERGIES OF $30 MILLION Note: E stimates do not include cost to achieve. 1 Includes consolidation of IT staff, decrease in third party spend on employee benefits and consolidation of translation ser vic es 30
MDC & Stagwell’s complementary capabilities have previously resulted in pitch invitations for $15+ million assignments; just a handful of potential collaborative wins could generate $90 - $150 million annual top - line benefit over time 31 Multi - year, multi - brand creative work serviced by joint team; won from a decades - long legacy incumbent $100M national campaign media buy led by joint team Public awareness campaign for NGO executed by cross - agency team WHAT WE CAN BUILD TOGETHER: ORGANIC GROWTH ACCELERATION
WHAT WE CAN BUILD TOGETHER: A PLAN FOR $3 BILLION IN ANNUAL REVENUES Equation For Success ($M ) 2025 Basis Combined Organic Revenue Growth $2,600 5%+ annual organic growth, driven by 10 - 15% digital marketing growth and complementary capabilities + New Digital Revenue Streams $75 Growth & development of new digital products + M&A Growth $325 Acquisitions of ~$65M Revenue / Year = TARGET GOAL $3,000 9%+ annual total growth OPPORTUNITY TO GROW TO $3 BILLION OF REVENUE IN 2025 THROUGH ORGANIC GROWTH, NEW DIGITAL REVENUE STREAMS AND ACQUISITIONS 32
PRO FORMA CAPITALIZATION 33 Pro Forma Capitalization Diluted Shares Outstanding 26% 77 PF Stagwell Units 74% 216 Pro Forma Fully Diluted No. of Shares Outstanding 100% 293 Note: Capitalization as of 12/11/2020. Fully Diluted Number of Shares O utstanding includes RSU’s, SARS, and contingent future commitments.
APPENDIX 34
APPENDIX CURRENT MDC CORPORATE STRUCTURE 35 $211.5M Credit Agreement $870M, 6.5% Senior Notes Public Operating CDN LPs Non - US Corporate Subsidiaries of MDC 3 MaxxCom Inc. (US) 2 MDC (CDN) 1 1 Issuer under MDC 6.50% Senior Notes Due 2024 2 Borrower under MaxxCom Credit Agreement Dated May 3, 2016 3 Non - US entities that are guarantors under the MDC Senior Notes and Maxxcom Credit Agreement Guarantor under Maxxcom Credit Agreement Guarantor under MDC Senior Notes
APPENDIX PRO FORMA CORPORATE STRUCTURE 36 1 Comprises $325M Revolver ($218M drawn on a pro forma basis; incremental revolving commitments of $90M allowed under the cre dit agreement) and $90M TLA 2 Holds operating entities of Stagwell Marketing Group, 3Holding Company which contains US corporate subsidiaries and non - guaran tor CFCs Guarantor under Maxxcom Credit Agreement Note on Transaction Structure In the transaction, Stagwell is assumed to receive 74% of the Midas OpCo Common Units (representing 74% of the economic interests of the common equity of the combined business) in connection with its contribution of the Stagwell business. In connection with the foregoing issuance, Existing MDC common shareholders will be collectively diluted to 26% ownership in New MDC’s common stock (with Stagwell holding approximately 5% of the combined company’s common stock based on its pre - combination ownership of common stock). As a result following the contemplated transactions, Stagwell and its affiliates will own an aggregate of approximately 79% of the voting and economic rights of the common equity of New MDC comprised of ( i ) Stagwell’s 5% of the common shares of New MDC based on its pre - combination ownership and (ii) Stagwell’s 74% stake in Midas OpCo’s Common Units and the corresponding voting rights represented by Class C Shares of New MDC. The noted percentages are representative of the common equity only and exclude the impact of any preferred shares ownership. New MDC (US) $415M Credit Facility ¹ MaxxCom LLC (US) Stagwell Holding (US) Midas OpCo LLC (US) [ ● ] New MDC Class C Common Shares 26% common units plus preferred units 74% common units Public Midas Corporate Holdco (US)³ SMGH LLC (US)² Public Company Registrant MDC $870M 6.5% Senior Notes
MDC Standalone Pro Forma($ in millions) Q3 2020 Adj.¹ MDC + Stagwell Liquidity Cash $37 ($15) $22 Revolver Availability (MDC) 193 (193) - Revolver Availability (Stagwell) - 107 107 Total Liquidity $230 ($101) $129 MDC Revolving Credit Facility - - - Stagwell Revolving Credit Facility - 218 218 Stagwell Term Loan A - 90 90 Senior Unsecured Notes 870 - 870 Goldman Sachs Subordinated Note - 25 25 Total Debt $870 $333 $1,203 Cash & Equivalents² (37) 15 (22) Net Debt $833 $348 $1,181 Goldman Sachs Preferred ⁴ $126 ($30) $96 Stagwell Preferred 57 - 57 Total Preferred $183 ($30) $153 Net Debt + Preferred $1,016 $318 $1,334 Memo: LTM Adj. EBITDA ⁵ $199 $117 $316 LTM Adj. EBITDA (Incl. Synergies) ⁶ 199 147 346 Net Debt / LTM Adj. EBITDA 4.2x 3.7x Net Debt / LTM Adj. EBITDA (Incl. Synergies) 3.4x APPENDIX PRO FORMA CREDIT PROFILE LESS LEVERAGE, BROADER SCALE AND FINANCIAL FLEXIBILITY PRO FORMA CAPITAL STRUCTURE PRO FORMA MATURITY SCHEDULE 8 1 Adjustments based on Stagwell projected balance sheet as of 3/31/21 2 Assumes ~$66M of fees & expenses paid in cash 3 Stagwell net debt includes $218M of RCF, $90M of TLA, less $51M of Cash. Excludes Deferred Acquisition Costs and Minority Inv est ments 4 The Goldman Sachs Preferred are being amended in connection with the Transaction but will not be redeemed until 2021. See sli de 39 5 MDC Covenant EBITDA and Stagwell Adjusted EBITDA 6 Assumes ~$30 million of run - rate cost savings identified by Stagwell and MDC management across media, shared services, research, T&E, production, real estate, corporate and other. Does not include costs to achieve 7 Net leverage calculation excludes issued but undrawn letters of credit of $18.6M and includes all $37.1M of cash on balance s hee t as of 9/30/20 8 Chart excludes undrawn letters of credit 37 3 7 $870 $90 $218 $107 $212 $25 2021 2022 2023 2024 2025 Senior Unsecured Notes Stagwell Term Loan A Stagwell RCF - Drawn Stagwell RCF - Available MDC RCF - Drawn MDC RCF - Available Goldman Sachs Subordinated Note
APPENDIX STAGWELL SENIOR SECURED CREDIT FACILITY 38 1 Includes Pledge and Security Agreements; Mortgages (if any); Pledge Agreements from certain minority shareholders under the RC F; and other agreements, instruments and documents intended to create, perfect or evidence liens to secure the secured obliga tio ns 2 Maturity on RCF triggered 91 days prior to May 01, 2024 if MDC Senior Notes due 2024 are not refinanced / terminated prior 3 Provided that if the Business Combination is not consummated within 30 days of the TLA Draw Date, Maturity shall be 31 days af ter the TLA Draw Date 4 For two (2) quarters after the Delayed Draw Term Loan Draw Date, RCF Applicable Rate based on > 3.75x leverage Amount ▪ $325 million committed revolving credit facility ▪ Incremental Revolving Commitments of $90 million allowable under terms of Credit Agreement ▪ $90 million Term Loan ("TLA") Borrowers ▪ Stagwell Marketing Group, LLC and such other parties that may be joined as a borrower from time to time Collateral ▪ All property owned, leased or operated by any Loan Party and persons covered by the Collateral Documents 1 Maturity ▪ RCF: November 18, 2024 2 / TLA: November 13, 2023 3 Interest & Commitment Fee ▪ RCF Applicable Rate 4 ▪ TLA Interest Rate : ▪ LIBOR + 300bps / ABR + 200bps ▪ RCF / TLA Base Rate: ▪ ABR Borrowing: subject to 1.5% floor, greater of the a) prime rate; b) NYFRB rate + 0.5%; and c) LIBOR (one month) rate + 1.0% ▪ Eurodollar Borrowing: LIBOR (one, three or six months) rate ▪ RCF and TLA subject to 50bps LIBOR floor Amortization ▪ RCF : None / TLA : 0.625% per quarter within first anniversary, 1.25% per quarter thereafter to Maturity Prepayment ▪ Anytime at par, subject to customary break costs Financial Covenants ▪ Total Leverage Ratio : 4.75x, stepping down to 4.50x on 9/30/2021 and 4.25x on 9/30/2022. Calculated as net of up to $50M of unrestricted cash ▪ Minimum Liquidity: $90M minimum liquidity from the TLA Draw Date until the date the Business Combination is consummated ▪ Equity Cure : maximum three cures over term, among other restrictions ▪ Restricted Payments : unlimited basket up to 3.0x Total Leverage Ratio; $25 million p.a. + builder basket for dividends; Investments in equity interests of non Loan Parties to not exceed greater of $20 million and builder basket ▪ Indebtedness : incremental $90 million Revolving Commitments; unlimited incremental unsecured indebtedness subject to Total Leverage Ratio ▪ Asset Sales : $15 million basket Leverage ABR Spread Eurodollar Spread Commitment Fee < 1.75x 0.50% 1.50% 0.15% > 1.75x & < 2.75x 0.75% 1.75% 0.20% > 2.75x & < 3.75x 1.00% 2.00% 0.25% > 3.75x 1.25% 2.25% 0.30%
APPENDIX SERIES 4 CONVERTIBLE PREFERENCE SHARES (GOLDMAN SACHS) 39 Size ▪ Liquidation Preference of $126M as at September 30, 2020 ▪ In connection with the Transaction, Holder has right to redeem up to $30M of its preferred shares in exchange for a $25M subordinated note or loan with a 3 - year maturity (i.e., e xchanged at a 17% discount to face value) Revised Rate ▪ 8% to March 2022 ▪ Subsequently, 6% to March 2024 (extended 2 years to be co - terminus with Stagwell’s Series 6 convertible preference shares) Conversion Price ▪ $5.00 (reduced from current conversion price of $7.42) Redemption ▪ No mandatory redemption Subordinated Note or Loan ▪ Size : $25M subordinated note or loan ▪ Maturity : 3 years ▪ Interest Rate : 8.0% per annum ▪ Prepayment : Any time at par without penalty Other ▪ Board seat and other existing rights remain with lower minimum ownership threshold ▪ Technical amendments to preserve rights upon domestication to Delaware entity
APPENDIX OTHER OBLIGATIONS 40 $M, LTM as of 9/30/20 (unaudited) MDC Stagwell Pro Forma Net Debt $833 $256 $1,181 Deferred Acquisition Consideration 46 13 59 Redeemable NCI 25 – 25 Non - Redeemable NCI 40 38 79 Series 4 Preferred 1 126 – 96 Series 6 Preferred 57 – 57 Investments 2 – (19) (19) Total Other Obligations 3 $294 $32 $297 Total Net Obligations $1,127 $289 $1,478 1 The Goldman Sachs Preferred are being amended in connection with the Transaction but will not be redeemed until 2021. See sli de 39. 2 FMV estimate calculated by Stagwell Management 3 Includes Series 4 and 6 Preferred, Deferred Acquisition Costs, RNCI, NCI, and investments. Stagwell DAC excludes Sloane and C o. related contingent liability
APPENDIX MDC NON - GAAP RECONCILIATION 41 $ in millions Q3 Q4 Q1 Q2 Q3 Q2-2020- LTM Q3-2020 - LTM Net income (loss) attributable to MDC Partners Inc. common shareholders (5.1)$ (10.5)$ (2.4)$ (4.1)$ 0.4$ (22.1)$ (16.7)$ Adjustments to reconcile to operating income: Accretion on and net income allocated to convertible preference shares3.3 3.4 3.4 3.5 3.7 13.6 14.0 Net income attributable to the noncontrolling interests 7.3 5.4 0.8 3.1 10.7 16.6 20.0 Equity in losses (earnings) of non-consolidated affiliates (0.1) - - 0.8 0.0 0.7 0.8 Income tax expense (benefit) 3.5 4.2 13.5 (7.9) 1.5 13.3 11.3 Interest expense and finance charges, net 16.1 15.7 15.6 15.9 15.3 63.3 62.5 Foreign exchange loss (gain) 4.0 (4.3) 14.8 (5.3) (2.2) 9.0 2.9 Other, net 0.4 (2.2) (16.3) (5.9) (0.5) (23.9) (24.9) Operating income 29.4$ 11.7$ 29.3$ 0.1$ 28.9$ 70.5$ 70.0$ Adjustments to reconcile to Adjusted EBITDA: Depreciation and amortization 9.4$ 9.5$ 9.2$ 8.9$ 9.3$ 36.9$ 36.9$ Impairment and other losses 1.9 5.9 0.2 18.8 0.2 26.8 25.0 Stock-based compensation 6.0 18.4 3.1 1.0 6.5 28.5 29.0 Deferred acquisition consideration adjustments 1.9 9.0 (4.6) 2.3 2.8 8.7 9.5 Distributions from non-consolidated affiliates (0.2) 2.2 (0.0) 1.1 0.2 3.1 3.5 Other items, net² 0.7 0.3 2.4 3.9 6.2 7.4 12.9 Adjusted EBITDA 49.2$ 57.0$ 39.6$ 36.2$ 54.1$ 182.0$ 186.8$ Adjustments to reconcile to Covenant EBITDA: Proforma dispositions³ (1.0)$ (1.3)$ (0.1)$ -$ -$ (2.4)$ (1.4)$ Severance due to eliminated positions 2.0 3.2 2.1 5.2 2.3 12.5 12.9 Other adjustments, net⁴ 0.2 0.4 0.4 0.2 0.1 1.2 1.0 Covenant adjusted EBITDA 50.4$ 59.3$ 41.9$ 41.6$ 56.5$ 193.3$ 199.3$ 2019 2020 Covenant EBITDA (LTM)¹ 1 Covenant EBITDA is a measure that includes pro forma adjustments for acquisitions, one - time charges, permitted dispositions an d other adjustments, as defined in the Company’s Credit Agreement. Covenant EBITDA is calculated as the aggregate of operatin g results for the rolling last twelve months (LTM). Each quarter is presented to provide the information utilized to calculate Cov enant EBITDA. Historical Covenant EBITDA may be re - casted in the current period for any pro forma adjustments related to acquisi tions and/or dispositions in the current period 2 Other items, net includes items such as severance expense and other restructuring expenses, including costs for leases that wi ll either be terminated or sublet in connection with the centralization of MDC’s New York real estate portfolio 3 Represents Kingsdale and Sloane EBITDA for the respective period 4 Other adjustments, net primarily includes one - time professional fees and costs associated with real estate consolidation
APPENDIX STAGWELL NON - GAAP RECONCILIATION 42 Source: Stagwell's financials and gives effect to certain sell - side adjustments and other adjustments based on reports by MDC th ird party accounting advisors 1 PF Revenue and quarterly results include unaudited results, 2 Pre acquisition results include Multi - View, The Search Agency, Reputation Defender, Volanti Media Holdings, Targeted Victory, Rhythm, MMI Agency, Stagwell Tech, Sloane & Company, Kettle Solutions and TrueLogic LTM Q3 2020 PF Revenue (LTM)¹ $ in millions Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q3-2020 - LTM Reported Revenue 180.9$ 179.8$ 157.5$ 223.7$ 742.0$ Adjustments to reconcile to Pro Forma Revenue: Pre acquisition results² 21.2 13.5 11.1 9.0 54.9 Pro Forma Revenue 202.2$ 193.3$ 168.7$ 232.7$ 796.9$
APPENDIX STAGWELL NON - GAAP RECONCILIATION (CONT’D) 43 Source: Based on Stagwell's financials and gives effect to other adjustments based on reports by MDC third party accounting a dvi sors 1 Net income, as shown by MDC third party accounting advisors, adjusted for PCAOB adjustments 2 Sell - side adjustments, as prepared by third party advisors and adjusted by MDC accounting advisors, for items including rent e xpense and other pro forma restructuring 3 Results include Multi - View, The Search Agency, Reputation Defender, Volanti Media Holdings, Targeted Victory, Rhythm, MMI Agency, Stagwell Tech, Sloane & Company, Kettle Solutions and TrueLogic 4 Adjustment to pre - acquisition reported EBITDA for the entities acquired in 2020, per MDC third party accounting advisors; incl udes unreconciled variances to sell - side report 5 Includes one - time Multi - View sublease credit 6 Other non - cash addbacks primarily consist of unrealized gains and losses, FX gains and losses and fair value revaluations for derivatives 7 Other adjustments consist of normalization adjustments such as out - of - period activity, run - rate adjustments, subleases and emp loyee medical insurance credit reversal, identified by both sell - side and MDC third party accounting advisors LTM Q3 2020 Adj EBITDA (LTM) $ in millions Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q3-2020 - LTM Net Income¹ 9.7$ 11.7$ 4.4$ 21.2$ 47.1$ Interest 1.8 0.9 2.0 2.3 6.9 Taxes 5.6 0.5 0.1 5.6 11.8 Depreciation & Amortization 7.5 11.1 9.7 7.6 36.0 Reported EBITDA 24.6$ 24.2$ 16.3$ 36.7$ 101.8$ Adjustments to reconcile to Adjusted EBITDA: Sell-side adjustments² 0.7 0.1 (0.0) 0.2 0.9 Pre-acquisition reported EBITDA³ 4.9 0.3 1.4 0.7 7.4 Adjs. to pre-acquisition reported EBITDA⁴ (0.1) (0.1) (0.1) (0.1) (0.3) Transaction and investment related expenses 7.0 0.0 1.2 1.0 9.3 Management and related costs (0.9) (0.9) (0.9) (0.9) (3.5) Nonrecurring items⁵ 0.4 0.7 0.9 0.1 2.1 Other non-cash addbacks⁶ 0.7 (3.0) 1.6 0.6 (0.1) Other adjustments, net⁷ 0.1 (1.2) 0.1 0.3 (0.7) Adjusted EBITDA 37.4$ 20.1$ 20.6$ 38.8$ 116.8$
TRANSFORMING MARKETING 44