Advertising: A Madison Avenue Deal Maker Continues His Spending Spree

Miles S. Nadal, the Monty Hall of Madison Avenue, is at it again, doing what he loves to do best: making deals. But when is enough enough?

Mr. Nadal, the chairman and chief executive of MDC Partners, an advertising conglomerate based in Toronto, hopes to get ahead in the intensely competitive advertising industry with a contrarian strategy of almost continuous change.

Like Mr. Hall sweet-talking a contestant on Lets Make a Deal, Mr. Nadal has persuaded the owners of well-known agencies like Crispin Porter & Bogusky, Cliff Freeman & Partners and Kirshenbaum Bond & Partners to cast their lot with MDC rather than far bigger competitors like the Omnicom Group, the WPP Group or the Interpublic Group of Companies.

But following that philosophy can be fraught with risk, as was demonstrated last week with the unraveling of an acquisition and merger involving two New York agencies, which Mr. Nadal orchestrated less than two years ago.

The agency formed by those deals, Margeotes Fertitta Powell, is being closed because it failed to grow as Mr. Nadal had hoped; the closing costs are being determined.

Yet Mr. Nadal, 49, is about to announce another round of deals, with agencies that work on tasks like brand identity and corporate communications. He plans to spend $150 million in the next three years on acquisitions, to beef up MDC in important, fast-growing areas like digital advertising.

All service businesses, all businesses in this industry especially, need to be in a constant state of evolution, Mr. Nadal said in one of two interviews over the last month.

With the changes in consumers, in the media, were under more pressure to add talent, to add capabilities, Mr. Nadal said. The long-term success stories in advertising have evolved, and constantly changed, with the environment.

The affable, fast-talking Mr. Nadal can be a charmer. But his ability to close deals is probably predicated less on his personality and more on his offbeat strategy: Rather than acquiring an agency outright, he initially takes a stake — typically from 20 percent to 80 percent — and lets the agency operate autonomously, under the MDC umbrella.

By comparison, the giant rivals of MDC almost always acquire total ownership of the agencies they buy. If the former owners stick around, there are operational rules to follow.

The really talented, creative people dont like being told what to do, said Jonathan Bond, co-chairman of Kirshenbaum Bond in New York, who with Richard Kirshenbaum sold 60 percent of the agency to Mr. Nadal in 2004.

I dont know if wed be good in a corporate structure, he added. Wed probably get fired in a week, with good reason.

In contrast, MDC has been a good fit for us, Mr. Bond said. We just go do it till someone tells us not to — and no one ever has.

One reason for Mr. Nadals belief in constant change is how it has paid off for him: a net worth estimated at more than $100 million; homes in the Bahamas and Palm Beach; an 80-foot cruiser with its own Web site (yachtdaretodream.com); and a special bonus from MDC in 2003 of $5.3 million.

Mr. Nadal started his business in 1980 on a far smaller stake — 500 Canadian dollars, a cash advance on his Visa card — which helped him open a company called Action Photographics. He has parlayed that modest beginning into MDC, the worlds 11th largest ad conglomerate, with revenue last year of $423.7 million.

From the start, Mr. Nadal has relished making over his holdings continually, shifting focus from photography to check printing to marketing services. Along the way, he bought and sold everything from a catalog retailer to a postage-stamp producer to a seed company.

Since deciding a decade ago to cut back the churn and concentrate on advertising, Mr. Nadal has amassed a portfolio of about 30 agencies in areas like creative services, online marketing, public relations, package design and sales promotion.

Miles keeps his promises, said Chuck Porter, the chairman of Crispin Porter in Miami, arguably the hottest agency in America for its irreverent campaigns for brands like Burger King, Coke Zero, Sprite and Volkswagen.

Mr. Nadal sometimes comes across as a salesman, said Mr. Porter, who joined his agency partners in selling 49 percent of Crispin Porter to MDC in 2001, and a lot of people do not necessarily want to talk to a salesman.

But he genuinely, truly believes in the product, said Mr. Porter, who also serves as the chief strategist for MDC. Its not like hes selling Chevys this week and Volkswagens the next.

Mr. Nadal said he believed his approach encouraged the founders of the agencies he buys to stay on, limiting the damage that can occur when they leave after deals are closed. He also appeals to their entrepreneurial side by letting them share in the future financial success of their agencies.

We talked to an awful lot of people who wanted to buy 100 percent, but we were never interested in that because we felt our biggest growth was in front of us, Mr. Porter recalled. Miles understands the value of partnership instead of ownership.

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