Endeavor is targeting an $8bn valuation in an upcoming initial public offering for the company that owns Hollywood’s biggest talent agency and the Ultimate Fighting Championship martial arts franchise.
The entertainment empire, founded in 1995 by Ari Emanuel, was valued at $6.3bn in 2017, when it landed a $1bn investment from the Canada Pension Plan Investment Board and Singapore’s sovereign wealth fund, GIC. It plans to raise as much as $712m in the upcoming share sale.
Since absorbing the William Morris Agency and IMG in a flurry of deal-making, Endeavor has shifted from its roots in talent representation, pushing into fashion, marketing and sports. More than 70 per cent of its $3.6bn revenue last year came from creating or licensing original content, according to securities filings.
A stock market listing could eventually allow some of Endeavor’s backers including the private equity group Silver Lake to sell their stakes.
Egon Durban, the Silver Lake managing partner who also serves as Endeavor’s board chairman, is not longer expected to serve on the media company’s audit committee once the listing is completed, according to a securities filing on Monday. His place will be taken by Kristina Salen, the former Etsy chief financial officer who now holds the same position at luxury retailer Moda Operandi and is a new nominee to Endeavor’s board.
Endeavor revealed in July that it had identified a “material weakness” in a risk assessment process related to its financial reporting function. The company has established an “initial remediation plan” to deal with the shortcomings, which it said “did not result in any error or restatement of our financial statements”.
The company will list as an umbrella partnership corporation, or up-C — an organisational structure known for granting tax benefits to company insiders. At the midpoint of the indicative price range, the company would be valued at about $8bn, excluding any value attributable to a special class of voting shares held by Silver Lake and certain executives.
Earlier this month, teeth-straightening company SmileDirectClub joined a list of more than 70 companies that have used Up-C structures since 2010, according to Dealogic. Shared office space provider WeWork plans to use a similar arrangement.
Endeavor generated just over $2bn in revenue during the first six months of 2019, a 37 per cent increase from a year ago. Its net loss narrowed to $192.6m as of June 30 from $404.5m a year earlier.