Cliff Freeman, MDC Partners Cut Ties

Agency Buys Back 20% Equity Stake From Holding Company

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NEW YORK (AdAge.com) -- So much for being a "perpetual partner."

After four years, Canadian holding company MDC Partners has called quits on its relationship with Cliff Freeman & Partners, returning its 20% equity stake in the ailing agency to its name-on-the-door founder.

Cliff Freeman
Cliff Freeman
"At this stage in Cliff Freeman's evolution, both Cliff and MDC Partners have agreed that it is best for him to control 100% of his company," an MDC spokeswoman said in a statement. "This will allow him to incentivize his new management team going forward. With this in mind, MDC Partners has sold back their 19.9% share."

"I've always believed in the power of the CFP brand," Cliff Freeman said in a statement to Ad Age. "I was granted an opportunity to buy it back and, committed to the best interest of the agency and our clients, opted to do so wholeheartedly."

Published reports placed the figure MDC originally spent for its minority stake at between $3 million and $5 million, but people close to the company estimated that the value of the stake is less than $1 million.

'Perpetual partnership' model
MDC's founder and chairman-CEO, Miles Nadal, has distinguished MDC from other marketing holding companies with a skin-in-the-game strategy -- one he's dubbed the "perpetual partnership" model -- that leaves equity stakes in the hands of the original owners.

In the case of Cliff Freeman, MDC's original equity stake of 20% never wavered. That's unlike with other shops in the MDC portfolio, in which Mr. Nadal has incrementally increased investment (Crispin Porter & Bogusky) or assumed full ownership (Kirshenbaum Bond & Partners).

"Cliff Freeman & Partners has brilliant creative in their DNA, which is why every agency network has wooed them," Mr. Nadal said back in 2004, when he struck the Cliff Freeman deal amid a buying spree in the U.S.

Indeed, once upon a time, the New York-based creative shop founded in 1987 by Cliff Freeman and Arthur Bijur had a reputation for distinctive creative work that made brands popular, such as its famed campaign for Little Caesar's that carried the tagline "Pizza! Pizza!"

Tumultuous times
Recent times have been tumultuous for Cliff Freeman, marked by the exit of clients such as Quiznos, Snapple and Bonefish Grill, as well as the ousting of former CEO Jeff McLelland.

It's not the first time the agency has found itself in this predicament with an outside owner. Saatchi & Saatchi held a stake in Cliff Freeman during the '90s but sold it back to Cliff Freeman management in 1999 for an estimated $4.6 million.

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