- Advertising firm MDC Partners said in an SEC filing that an executive committee established by the company's board of directors will lead the firm following the planned departure of its CEO on Jan. 1, Adweek reported. The filing confirmed MDC is searching for a new CEO and looking for "potential strategic alternatives," including selling the company.
- MDC has also created a three-member "strategic alternatives committee" to manage and oversee the executive group. The team is comprised of independent board member and lead director Irwin Simon, current CEO of the Hain Celestial Group, owner of Celestial Seasonings, MarketWatch Inc. founder and former USA Today publisher Larry Kramer, and financial executive Anne Marie O'Donovan.
- Hedge fund FrontFour Capital Group, which owns about 5.3% of MDC, has reportedly sent a letter to the firm calling for the replacement of three of its eight board of directors, according to The Wall Street Journal, citing an SEC filing. The hedge fund group has been putting pressure on MDC to make executive changes for some time.
MDC, which owns more than 50 agencies, including Crispin Porter Bogusky, Anomaly and 72andSunny, has struggled with winning new business and clients cutting costs, and is saddled with more than $1 billion in debt. The company is considering a sale for the second time in the past two years, and recently some of the company's agencies attempted to buy themselves back, but were turned down by the MDC board of directors. Accenture is reportedly one of three finalists seeking to acquire MDC.
MDC is not alone in its struggles, as several major ad holding groups have had a hard time meeting clients' digital marketing demands and adapting to new technology. Nearly three-quarters of multinational brands say they are currently reviewing their agency arrangements, with many wanting to reduce the number of agencies that they work with, bring more marketing functions in-house or hiring consultants, according to the World Federation of Advertisers and The Observatory International. This has led ad companies to re-evaluate their offerings and restructure. For example, WPP-owned Grey Group recently launched Grey Consulting to focus on business and brand design, innovation and digital transformation.
If Accenture's bid to acquire MDC is successful, the move would align with consultancy's efforts to grow by snapping up agencies and focusing more on digital offerings. The company's "new" business sections, including Accenture Interactive, Accenture Applied Intelligence and Industry X, grew more than 20% over the past 12 months. Accenture generated more than $7.8 billion in revenue from marketing services, which makes Accenture Interactive nearly equal in size to Interpublic, the fourth-largest ad group worldwide. Accenture's total revenue rose 10.5% to $40 billion for the year ending August 2018.