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Noncontrolling and Redeemable Noncontrolling Interests

3 Months Ended

Mar. 31, 2021

Noncontrolling Interest [Abstract]

Noncontrolling and Redeemable Noncontrolling Interests

Noncontrolling and Redeemable Noncontrolling Interests

When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as noncontrolling interests in the equity section of the Company’s Unaudited Condensed Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through additional paid-in capital (but not less than their initial redemption value), except for foreign currency translation adjustments. On occasion, the Company may initiate a renegotiation to acquire an incremental ownership interest and the amount of consideration paid may differ materially from the amounts recorded in the Company’s Unaudited Condensed Consolidated Balance Sheets.

Noncontrolling Interests

Changes in amounts due to noncontrolling interest holders included in Accruals and other liabilities on the Unaudited Condensed Consolidated Balance Sheets for the year ended December 31, 2020 and three months ended March 31, 2021 were as follows:

			Noncontrolling Interests
Balance at December 31, 2019			$	14,028
Income attributable to noncontrolling interests			21,774
Distributions made			(15,192)
Other			94
Balance at December 31, 2020			$	20,704
Income attributable to noncontrolling interests			4,491
Distributions made			(5,285)
Other			36
Balance at March 31, 2021			$	19,946

Changes in the Company’s ownership interests in our less than 100% owned subsidiaries during the three months ended March 31, 2021 and 2020 were as follows:

			Three Months Ended March 31,
			2021						2020
Net income attributable to MDC Partners Inc.			$	5,010					$	1,002
Transfers from the noncontrolling interest:
Decrease in MDC Partners Inc. paid-in capital for purchase of redeemable noncontrolling interests and noncontrolling interests			(330)						(503)
Net transfers from noncontrolling interests			$	(330)					$	(503)
Change from Net income attributable to MDC Partners Inc. and transfers to noncontrolling interests			$	4,680					$	499

Redeemable Noncontrolling Interests

The following table presents changes in redeemable noncontrolling interests:

			Three Months Ended March 31, 2021						Year Ended December 31, 2020
Beginning Balance			$	27,137					$	36,973
Redemptions			—						(12,289)
Granted			—						—
Changes in redemption value			(1,681)						2,800
Currency translation adjustments			(104)						(347)
Ending Balance			$	25,352					$	27,137

The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts during 2021 to 2025. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.

The redeemable noncontrolling interest of $25,352 as of March 31, 2021, consists of $16,469 assuming that the subsidiaries perform over the relevant future periods at their discounted cash flows earnings level and such rights are exercised, $8,883 upon termination of such owner’s employment with the applicable subsidiary or death and $0 representing the initial redemption value (required floor) recorded for certain acquisitions in excess of the amount the Company would have to pay should the Company acquire the remaining ownership interests for such subsidiaries.

These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values. There is no related impact on the Company’s income per share calculations.

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- Definition

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-URI http://asc.fasb.org/topic&trid=2197479

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- References

No definition available.

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