Endeavor Group Holdings, the American holding company for talent and media agencies run by Ari Emanuel, is going public. Emanuel is the brother of former Congressman, White House Chief of Staff and Mayor of Chicago Rahm Emanuel. The Beverly Hills based Company expects to raise $511.2 million by selling 21.3 million shares priced at $23 to $24 a share in its IPO. This would leave it with a value of more than $10 billion.
Endeavor is a global entertainment, sports and content company. It is comprised of industry leaders including entertainment agency WME; sports, fashion, events and media company IMG; and premier mixed martial arts organization UFC. The Endeavor network specializes in talent representation, sports operations & advisory, event & experiences management, media production & distribution, experiential marketing and brand licensing.
CEO Ari Emanuel and executive chairman Patrick Whitesell will be left with a controlling interest in the company with at least $900 million worth of stock held between them, or more than 37.6 million fully-converted, diluted shares out of a total of 429.7 million.
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The company is scheduled to begin trading today, Thursday, on the New York Stock Exchange under the ticker symbol “EDR.” There are 21 banks underwriting the deal, led by Morgan Stanley, Goldman Sachs, JP Morgan and Deutsche Bank.
Endeavor had originally planned to go public back in 2019. But Ari Emanuel pulled that IPO a day before it was scheduled because the company could not get anywhere near its desired sale price. Then Endeavor expected to charge more than $30 a share. So this IPO must come as a disappointment to Emanuel and his investors.
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So it seems that everyone wants to go public these days, not just high tech startups from Israel. But why? Well right now the world I beginning to pull itself out of the Coronavirus recession. And the markets in America have been booing ever since President Biden pushed through his $1.8 trillion stimulus package. And the Fed is not expected to raise interest rates for the time being, which is always a green light for the stock markets.
But is Endeavor really worth this much? Well some observers, including Forbes, think not.
Calling it “another overvalued IPO” Forbes wrote that, “Endeavor will test investors’ appetite for overvalued and over-hyped IPOs. No matter how many Elon Musks it adds to its board, Endeavor’s expected valuation of $10 billion is in nosebleed territory.”
“A $10 billion valuation is too high because it implies the company will achieve revenues greater than Fox Corp (FOXA) and Live Nation (LYV). Meanwhile, at its 2020 cash burn rate (-$1.5 billion), Endeavor only has enough cash to survive another 8 months.”