IPO

Silver Lake-backed sports & entertainment empire files for IPO

May 23, 2019
More than a month after reports emerged that Endeavor had begun preparing for an IPO, the marketing and entertainment colossus has filed to go public, with The Hollywood Reporter citing insiders who say the Los Angeles-based company will raise around $500 million at a valuation of at least $6 billion.

Best known for being Hollywood's largest talent agency, the Ari Emanuel-led business posted $3.6 billion in revenue, $231 million in net income and $551 million in adjusted EBITDA in 2018, per its S-1. The company will trade on the NYSE under the symbol EDR, with a dual-class stock structure that will allow Emanuel (the inspiration for Jeremy Piven's character on HBO's "Entourage") and Endeavor chairman Patrick Whitesell to remain in control of the business.

If it comes to pass, that IPO valuation would be good news for Silver Lake, which originally purchased a minority stake in Endeavor (fka William Morris Endeavor Entertainment) in 2012, with the Financial Times pegging the investment size at $200 million.

The company then went on an acquisition spree; in 2014 it acquired IMG, a global entertainment and sports marketing agency, for a reported $2.4 billion, with Silver Lake reportedly devoting $500 million to own a majority stake in the combined business. The following year, Endeavor then purchased Miss Universe, The Wall Group and Professional Bull Riders. And in 2016, it made perhaps its splashiest acquisition of all, buying the MMA league UFC for more than $4 billion. The deal came just a few months after Softbank invested $250 million in the business at a valuation of around $5.5 billion. Overall, Endeavor now has more than 7,000 employees across 20 countries, in addition to representing more than 6,000 clients in entertainment and sports, including Matt Damon, Lady Gaga and more.

The SEC filing comes amid a tumultuous time for Endeavor, which has been locked in a dispute with the Writer's Guild of America over controversial packaging fees that writers have argued represent a conflict of interest for their agents. Specifically, the WGA has placed the blame squarely on private equity firms that have instituted the practice, filing suit last month against Endeavor, PE-backed Creative Artists Agency and others for breaching their fiduciary duties after negotiations stalled. And Endeavor is well aware of the potential risks that come with such a lawsuit.

"Any unexpected change in franchise or licensing requirements (whether applicable to us, our clients or otherwise), could have an adverse effect on our business, financial condition and results of operations," the S-1 warns.

The dispute remains ongoing. On Wednesday, the WGA agreed to meet with Association of Talent Agents after the major agencies reached out in hopes of a compromise, per The Hollywood Reporter. The meeting will come less than two months after WGA members fired more than 7,000 agents across the industry.

Featured image via LeoPatrizi/E+/Getty Images Plus

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