Endeavor, the owner of not just WME but also IMG, and a majority stakeholder for the TKO Group (the new home of the UFC), is reportedly considering leaving the public trading space. Entertainment attorney Brandon Blake, from Blake & Wang P.A, shares the news.
Strategic Review Underway
Reportedly, this formal review is under consideration due to an inherent discrepancy between the intrinsic value of its assets and their public market value. Endeavor’s major stakeholder (at 71%) is the private equity company Silver Lake, and they are reportedly the key drivers behind the proposed move.
They likely have a point on the market undervaluation. CAA’s majority stake recently sold at a $7B evaluation, for example, or 15 times their revenue on the agency business side. IMG Academy and Endeavor Content also fetched very enticing market prices. Yet Endeavor itself is currently tracking around 1.5 times its revenue value. While it is unlikely any publicly listed company would receive the private equity value CAA did, that’s still a puzzlingly large discrepancy.
A Whole or Pieces?
It also seems that Endeavor may be interested in selling off pieces of the business rather than a whole, in a bid to maximize shareholder value. We could have already seen the start of this with the merger of the UFC and WWE into the TKO Group, although that’s not currently up for sale. In fact, the same argument about public market value and intrinsic value reared its head at the time there, too.
If the move to return to private equity vs the market does go ahead, it will create a very intriguing rollback of the M&A flurry we saw in 2021 and 2022 from a key player on the entertainment scene. Could we potentially see more, similar moves? In the ever-shifting entertainment space, nothing is ever fixed, after all.
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