Best known for its big roster of ad agencies, holding company MDC Partners is expanding into new terrain—proxy solicitation—with a majority partnership interest in Kingsdale Shareholder Services, a Toronto communications firm.
In plain language, proxy solicitation is about using communication strategies to help companies or prominent investors convince shareholders to accept or spurn a deal. And in this niche, Kingsdale is a top player.
“We have 90 per cent of the market share in Canada,” says Wes Hall, CEO of Kingsdale, who was recently described as “one of Bay Street’s most influential power brokers” on a cover of Report on Business Magazine. His company has been involved in such high-stakes deals as BHP Billiton’s $38.5-billion bid for PotashCorp, and Petro-Canada’s $19-billion merger with Suncor Energy.
This new partnership came together very quickly after Miles Nadal, CEO of MDC, and Hall met through a mutual friend in December.
For MDC, the deal capitalizes on growing demand for proxy solicitation services. This has been fueled by the rise of “activist investors,” a trend that Hall saw take off about three years ago, when the market took a downturn. Activist investors are major shareholders – including private equity firms, hedge funds and rich individuals – focused on turning a company’s fortunes around by effecting change (such as shaking up seats on a board).
“In an era of escalating [merger and acquisition] activity, increasing shareholder activism, and heightened influence from advisory services firms, our clients are in greater need of specialized strategic communications and proxy advice at the C-suite and board level to pursue their business strategies,” Nadal said in a statement.
For Kingsdale, the deal allows the company to grow beyond Canada. “I didn’t want to just cash a cheque and run off into the sunset. I wanted to continue to build. I have international aspirations, but it takes a lot of risk to get there,” explains Hall. “[MDC] came to me and were prepared to a) allow me see that vision to fruition, and b) not be in my hair while I do it.”
Hall predicts that his 65-person team will expand to about 80 by the end of 2014, and he expects to open an office in New York shortly, as well as in London and potentially Australia within the next two years.
