What happened

Shares of MDC Partners (NASDAQ:MDCA) jumped higher after Goldman Sachs (NYSE:GS) announced a 15% stake in the struggling advertising company. As of 10:49 a.m. EST, the stock was up 33.3% on the news.

So what 

The famed investment bank injected $95 million into MDC Partners for a stake in the form of nonvoting convertible preferred shares, and Bradley Gross, a managing director at Goldman Sachs, will join MDC's board.

The agreement comes as MDC stock tumbled last year on mounting financial losses and as the company said last November that it would seek help from advisor LionTree to evaluate its financial and capital structure strategy.

MDC Partners CEO Scott Kauffman said, "We are extremely pleased to be partnering with Goldman Sachs. Their investment in MDC affirms the value of our world-class agency portfolio, strengthens our balance sheet, and validates a solid finish to 2016 and our prospects going forward."

The MDC Partners office

Image source: MDC Partners.

Now what 

As Kauffman indicates, the Goldman Sachs investment does two things for MDC Partners. First, it will have an advisor to help it revamp itself, which many companies would normally pay for. Second, it's a sign that Goldman sees value in the company, which owns several ad agencies including Crispin Porter + Bogusky and 72andSunny.

Goldman said it was "excited to partner with MDC to help drive growth and innovation in the marketing and communications industry," indicating that the bank has no intention of seeking a sale, though that remains a possibility if it continues to struggle. Investors will learn more when MDC reports fourth-quarter earnings on Feb. 27.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.