Adam Wyden: buying someone else's pain in Stagwell $STGW and Driven Brands $DRVN | ADW Capital

Summary

• Wyden’s core Stagwell $STGW math: at $7.40 he frames the stock at roughly 4.9x 2027 EBITDA and more than 4x 2028 EBITDA—not earnings—alongside a “22% free cash flow yield in 27 and 26.5 in 28.” He estimates ~$570M EBITDA next year and ~$700M in the 2028 political cycle, versus company guidance of $1B EBITDA by 2029. At Publicis’s 9% FCF yield it’s an $18 stock; at a 16x market multiple, $25-26.50. “These businesses are priced as if they’re going away, not like they’re growing.”
• His anti-“AI loser” case is that big-budget marketing works like investment banking, not gig creativity. Large CPG clients spending roughly $200M bring their own advisers to agency pitches—“an investment banker deciding which investment banker you’re going to use”—while Stagwell layers 30-plus years of agency data and its own agentic operating-system effort on top of human “chutzpah” that LLMs cannot replicate. He separately discusses IBM’s “machine,” which he says is being developed with Palantir.
• Andrew Walker’s sharpest pushback: management has publicly called the stock undervalued in Q2 2022, Q2 2023 and 2024 while it went nowhere. Wyden’s answer is multiple contraction plus legacy issues—dual-class structure, a TRA and declining revenue from divestitures—and that the divestiture-and-investment slog is ending: “the market doesn’t care until it cares… suddenly you have that aha moment, the stock’s up 300%.”
• The capital-return kicker: Wyden expects ~$340M of free cash flow over Q2-Q4, thinks roughly $150-175M of additional stock can be bought back, and sees another ~$170M of cash, potentially enabling ~20M more shares to be retired. He estimates a ~$2.8B year-end EV and “Buffett math” approaching a 50% return with no multiple expansion. ADW holds 5M shares plus a million options and teases: “stay tuned for the August 14 filing.”
• On Driven Brands $DRVN, the pitch is that Take 5 alone “is worth more than the entire market cap.” Quick-lube economics—a $75 oil change versus roughly $400 at a Porsche dealer, 40% cash-on-cash returns on new units, and roughly 1,300-1,400 stores with a stated goal of about 3,000—ride the DIY-to-do-it-for-me shift and an aging, K-shaped car parc.
• The sum-of-parts unlock both men converge on: Auto Glass Now could be worth roughly $600M, with current EBITDA estimated at $30-35M and a cash-pay opportunity of $60-75M; collision could represent ~$50-60M of EBITDA at 13-16x, or roughly $900M. Walker’s math treats those proceeds as roughly covering $1.5B of net debt, though Wyden says the proceeds would not quite cover all of it. That would leave a ~$2B market cap holding franchise EBITDA of ~$100M plus a ~$400M-EBITDA Take 5. Wyden models $550M total 2027 EBITDA; Walker argues he’s “going to be proven low.”
• The EV bear case gets dismissed on the data: new-vehicle sales swung back to roughly “97 and 3” ICE-versus-EV, average vehicle age has gone from 7.5 to ~13 years (“why can’t it go to 17?”), and cheap Chinese EVs are “not happening given the political climate.” Charging infrastructure, the grid and available power are, in Wyden’s view, far from ready—“fantasy land.”
• On the Roark endgame, ADW’s public take-private offer at $18, when the stock was $12, frames intrinsic value, and Wyden calls the leverage-target rationale for not buying back stock “ridiculous” after “all the money you blew on car wash and the accounting misstatement.” Walker’s conclusion: Driven “belongs in private equity hands,” where someone will finally take “an axe to the corporate cost.”

Deep dive

1. Stagwell is the un-IPO that escaped everyone’s radar

• Wyden’s setup: Stagwell is a marketing services company in the Omnicom/Publicis/WPP lineage, but built by Mark Penn—Bronx middle-class, Harvard undergrad, reportedly Columbia Law, developer of “basically the first modern polling system,” Hillary Clinton’s campaign manager/adviser, then WPP, then global head of strategy at Microsoft under Steve Ballmer.
• With capital from ADW, Ballmer’s family office and others, Penn and lieutenant Jay Levitan rolled up smaller agencies. Wyden estimated the business reached $150-200M of EBITDA, while acknowledging he was not sure of the figure, then merged with the troubled MDC Partners in late 2021—a reverse merger with “no fanfare,” listing as marketing spending in technology pulled back and 2022 political numbers peaked.
• The last four years, in his telling, were “cleaning up some of the legacy messes at MDC,” divesting unprofitable businesses and building technology infrastructure—which is why the company “really escaped people’s radars.” Getting to ~$700M of prospective EBITDA in 11 years from a blank sheet is, per Wyden, “pretty incredible.”

2. The AI debate: investment bankers deciding investment bankers

• Walker’s structural challenge, worth keeping intact: the holdcos have trailed the S&P for 5, 10, 20 years because “the human intellectual capital sucks up all the excess returns”—and AI makes it worse, since the most creative individuals may no longer need agency back offices to service huge clients.
• Wyden concedes multiples have contracted from 12-15x, “maybe wrongly,” but rejects the extrapolation. His touchstone: the Audemars Piguet-Swatch collaboration on his wrist—a roughly $400 watch marrying a roughly $20,000 brand to an accessible one—“was a human being who did that,” not a robot. LLMs “generate solutions from the past as opposed to generating solutions for the future.”
• The scale argument: Stagwell’s cited wins include Mondelēz, Hershey’s, Starbucks, Navy Federal Credit Union and Heineken. Wyden says large CPG companies spending roughly $200M bring advisers to agency pitches: “an investment banker deciding which investment banker you’re going to use. This is an industry that is not really going to be lost to AI very quickly.” Nobody hires a smart guy with a laptop over Centerview for a complex carve-out; the same logic applies here, alongside the plumbing of media buying and 1P data.
• Wyden separately cites IBM’s “machine,” an agentic operating-system effort he says is being developed with Palantir, while describing Stagwell’s own agentic operating system, software tools and 1P data. The recurring word is “chutzpah”: knowing “who was their Harvard Business School section mate,” accessing walled-garden information and bringing the ingenuity that gets into the prompt.

3. Not strictly a marketing box: the merchant-bank ambition

• Wyden frames Stagwell as owner-operated—Penn owns roughly 15%, Levitan owns a meaningful stake, and Ballmer is involved—and deliberately category-blurring: much of the work is digital-transformation consultancy, “not some cheap BPO thing over in India,” edging toward McKinsey/Accenture strategy territory.
• His historical riff: “the old ways are the right ways”—J.P. Morgan-style merchant banks advised and invested as principals, and he can see Stagwell eventually incubating companies or deploying its skills into principal investing. “It’s not black or white.”

4. The jockey question: Penn is 71

• Walker’s push: this is heavily a founder bet, and even a sharp 71-year-old is a 75-year-old key-man discount by exit time. Wyden’s answer: “in the beginning it was more of a jockey bet,” but acquired-agency heads take half their consideration in stock and retention at the top has been very good; “this business survives and thrives without him,” with Levitan able to “fill his shoes tomorrow.”
• His analogy: Blair Effron’s Centerview, or KKR—“any human capital business, the longer it does well, the more the brand sort of stands as opposed to the people.” And the season matters: 2021-26 was “recalibration and right-sizing”; 2026-30 is guided to “a billion dollars of EBITDA by 29. I think they could exceed that. They’re definitely going to hit it.”

5. The valuation: $7.40 versus an $18-26 range

• Wyden prefers consolidated earnings to the sum-of-parts value Penn discussed on the Q4 call—roughly $1.2B for political plus cloud marketing. He estimates ~$340M of FCF over Q2-Q4, believes roughly $150-175M of additional stock can be repurchased within the credit-agreement baskets, sees another ~$170M of cash and potentially ~20M more shares retired—landing at roughly $2.8B enterprise value on the year-end share count.
• The earnings path: $500M EBITDA guide midpoint this year, which he thinks they beat; ~$570M next year; and ~$700M in 2028’s political cycle—without M&A assumed—and “about a buck 60 of free cash” next year. Publicis trades at ~9% FCF yield; matching that makes Stagwell an $18 stock. At 6%, which he describes as a traditional market multiple, 16x cash flow/earnings produces roughly a $25-26.50 stock.
• The punchline quote: “The company on our numbers is like a 22% free cash flow yield in 27 and 26.5 in 28 not including any capital allocation. These businesses are priced as if they’re going away, not like they’re growing.”

6. Walker’s best pushback: four years of “we’re undervalued” and a flat stock

• Walker reads back the receipts—“grossly undervalued” in Q2 2022, “way undervalued” in Q2 2023, and 2024 divestiture multiples implying undervaluation—and asks what the market is seeing that Wyden is missing.
• Wyden’s diagnosis: multiple contraction plus structural repellents—“there was a dual class before, there was a TRA,” and above all declining revenue from divestitures: “no one likes declining revenue in the stock market… they want speed and power,” the trifecta of revenue growth, earnings and margin expansion, which is only now arriving.
• The pattern he’s lived: “the market doesn’t care until it cares… you’re like, they’re doing everything right, no one cares. And then suddenly you have that aha moment, the stock’s up 300%.” His framing is that he is buying “everyone else’s pain”—the investments and time Penn and Levitan spent building the company—and sitting in the passenger seat as the benefits arrive.
• Supporting operational detail: Wyden says Stagwell has the highest revenue per employee of any advertising holdco, though he does not recall the number; technology CapEx and G&A are leveling off, AI is reducing costs, and high-margin software wins are layering on—a “growth spurt” that should force a re-rate.

7. The activist ask: buy the piss out of the stock—and watch August 14

• The push here is mild by ADW standards: on “Buffett math”—FCF yield plus growth—he gets “almost a 50% return… no multiple expansion,” so buybacks at $7.40 are “very, very intelligent.” He guesses the company will “put their foot on the gas” as back-half seasonality frees cash. Position: 5M shares plus a million options—“stay tuned for the August 14 filing. They might be amused by what we have.”
• His zoom-out, which Walker endorses: “the power of the human being is actually more valuable today in a post-LLM world,” because most people just relay what the LLM spits out. Walker’s joking activist aside: “if you’re building something that’s AI powered, you cannot call it The Machine.”

8. Driven Brands: Take 5 economics against the EV bear case

• Wyden calls Driven “a sad story” with a good genesis—“Take 5 was basically built inside of Driven and that’s worth more than the entire market cap.” The macro: cars are driven longer, dealer service is exorbitant ($400 for a Porsche oil change versus $75 at Take 5—yes, he’d take his Porsche there), DIY is shifting to do-it-for-me, K-shaped economy dynamics help, build-outs are cheaper than Valvoline’s, and new-unit cash-on-cash returns are about 40%, with roughly 1,300-1,400 current units and a stated goal of about 3,000.
• Walker’s bear case—Chinese EVs flooding in after tariffs, and the terminal-multiple question once EVs take the car parc—gets a data answer: EV charging, grid and power requirements are “fantasy land,” new-vehicle sales are back to roughly “97 and 3” ICE-versus-EV after dipping to 92-93, and average vehicle age has gone from 7.5 to ~13 years—“why can’t it go to 17?”
• The enthusiast digression Wyden can’t resist: manual-transmission resale prices are a signal that people enjoy driving, and driving one “is therapeutic… good for your health”—while “you can’t have a manual transmission EV.”

9. The sum-of-parts unlock and the Roark endgame

• The two build the math live: Wyden estimates Auto Glass Now at roughly $30-35M of current EBITDA and says a return to cash-pay could produce $60-75M; he suggests it could be worth roughly $600M, while also discussing possible 15-20x sale multiples for the existing business. Collision is undisclosed but, per Wyden’s primary scuttlebutt, produces $50-60M of EBITDA and “could easily be $70M,” potentially worth 13-16x or roughly $900M. He views it as a liquid tradable asset because consolidators such as Boyd Group and Caliber need businesses to buy; retiring franchisees could create built-in “buy-downs.”
• Walker’s math treats those two sales as roughly covering the $1.5B of net debt, but Wyden says the proceeds would not quite cover all of it. Walker then leaves a ~$2B market cap for roughly $100M of franchise EBITDA plus a ~$400M-EBITDA Take 5—“this is why I got to be in position.” Wyden models $550M total 2027 EBITDA; Walker, citing store seasoning and adjusted-item roll-off, insists “you’re going to be proven low.”
• On Roark’s 60%+ control: ADW’s public $18 offer, made when the stock was $12, “underscores the underlying value,” though Wyden notes Valvoline’s multiple has since expanded massively and says it trades at 11x EBITDA. His frustration: “I think they should be repurchasing shares right now… this whole leverage thing is ridiculous. How about all the money you blew on car wash and the accounting misstatement?” He says current buyers include value investors willing to buy “the dirty garage-find Porsche… rusty wheel wells, but an engine with 25,000 miles on it.”
• On strategic exits: Wyden initially dismisses a Valvoline-Take 5 merger, then reverses himself—combined they represent only about 10-15% of U.S. oil changes, and he thinks the Breeze issue may have involved geographic guarantees to Valvoline franchisees rather than market concentration, though he is not certain. Walker’s verdict: Driven is subscale as a public company and “belongs in private equity hands,” with an owner taking “a sharper eye to that corporate cost.”
• The close, on regime change: Wyden likens value investors to “Moses wandering in the desert” through AI and semiconductors, but feels it turning; Walker agrees—“there are going to be a lot of companies that are AI quote-unquote losers today that are going to be AI winners and generate massive returns.”