Personal Finance
GS

Why MDC Partners Stock Soared Today

The MDC Partners office

What happened

Shares of MDC Partners (NASDAQ: MDCA) jumped higher after Goldman Sachs (NYSE: GS) announced a 15% stake in the struggling advertising company. As of 10:49 a.m. EST, the stock was up 33.3% on the news.

So what

The famed investment bank injected $95 million into MDC Partners for a stake in the form of nonvoting convertible preferred shares, and Bradley Gross, a managing director at Goldman Sachs, will join MDC's board.

The agreement comes as MDC stock tumbled last year on mounting financial losses and as the company said last November that it would seek help from advisor LionTree to evaluate its financial and capital structure strategy.

MDC Partners CEO Scott Kauffman said, "We are extremely pleased to be partnering with Goldman Sachs. Their investment in MDC affirms the value of our world-class agency portfolio, strengthens our balance sheet, and validates a solid finish to 2016 and our prospects going forward."

The MDC Partners office

Image source: MDC Partners.

Now what

As Kauffman indicates, the Goldman Sachs investment does two things for MDC Partners. First, it will have an advisor to help it revamp itself, which many companies would normally pay for. Second, it's a sign that Goldman sees value in the company, which owns several ad agencies including Crispin Porter + Bogusky and 72andSunny.

Goldman said it was "excited to partner with MDC to help drive growth and innovation in the marketing and communications industry," indicating that the bank has no intention of seeking a sale, though that remains a possibility if it continues to struggle. Investors will learn more when MDC reports fourth-quarter earnings on Feb. 27.

10 stocks we like better than MDC Partners

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and MDC Partners wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

GS MDCA

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More