Company: STGW
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0000876883-25-000017
Chunk: 31

Company: Stagwell Inc
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 8
Chunk 31
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agwell Media’s noncontrolling interest balance (approximately $424 million as of March 31, 2025) has been reclassified to the respective Stagwell Inc. Shareholders’ Equity accounts. In addition, in connection with the Class C Exchange, the Company will realize an increase in the tax basis of Stagwell Global LLC (“OpCo”)’s assets through a deferred tax asset and, under its Tax Receivables Agreement (“TRA”), an increase to the amounts due Stagwell Media equal to 85% of certain tax savings. The Company is evaluating the likelihood that it will realize the benefit represented by the deferred tax asset and, to the extent that the Company estimates that it is more likely than not that it will not realize the benefit, it will reduce the carrying amount of the deferred tax asset with a valuation allowance and a corresponding reduction to the TRA liability. The Company is currently evaluating the value of the deferred tax asset and TRA liability and will reflect such amounts in its financial statements within its Quarterly Report on Form 10-Q for the period ended June 30, 2025. 

On January 1, 2025, the Company entered into a stock purchase agreement to acquire ADK Group, an integrated marketing solutions company. The purchase price is dependent on the closing balance sheet but is estimated to be approximately $24 million. The acquisition is expected to close in the second quarter of 2025.

Significant Factors Affecting our Business and Results of Operations 

The most significant factors affecting our business and results of operations include national, regional, and local economic conditions, our clients’ profitability, mergers and acquisitions of our clients, changes in top management of our clients and our ability to retain and attract key employees. New business wins and client losses occur due to a variety of factors. We believe the two most significant factors are (i) our clients’ desire to change marketing communication firms, and (ii) the digital and data-driven products that our portfolio of marketing services firms, which we refer to as “Brands,” offer. A client may choose to change marketing communication firms for several reasons, such as a change in leadership where new management wants to retain a Brand that it may have previously worked with. In addition, if the client is merged or acquired by another company, the marketing communication firm is often changed. Clients also change firms as a result of the firm’s failure to meet marketing performance targets or other expectations in client service delivery. 

Seasonality

Historically, we typically