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Patrick Whitesell and Ari Emanuel lead the successful IPO.

Eighteen months after tepid interest killed off a planned initial stock offering for Endeavor, CEO Ari Emanuel has completed a $511 million IPO that values the company at $10.3 billion and the shares he controls with partner Patrick Whitesell at $864 million.

The two Hollywood agents rang the opening bell at the NYSE Thursday to kick off the first day of trading for the company that owns the William Morris Endeavor talent agency, the Ultimate Fighting Championship and the Miss Universe Competition.

Its a big paydayand a moment of redemptionfor Emanuel, one of Hollywoods hardest-charging agents, who has transformed the boutique talent agency he founded in 1995 into a media company in its own right. He and executive chairman Whitesell, Endeavors two most senior executives, hold as much as 17% voting control of the company and share an economic interest in shares valued at $864 million, based on the IPO stock price of $24. Todays regulatory filings do not spell out their individual holdings, though Emanuel appears to have a slightly larger stake in the company.

A spokesperson for Endeavor declined to comment.

Over the course of two decades, Endeavor merged with one of Hollywoods oldest talent agencies, the William Morris Agency, acquired the sports management firm IMG, began investing in events, such as New York Fashion Week and Frieze London art fair, as well as sports leagues, such as the UFC and the Professional Bull Riders organization. All of these moves took the firm beyond the fickle world of talent representation, which is, in the words of one Hollywood observer, one bad lunch with a movie star away from a wrecking ball.

This plunge into new corners of the entertainment world helped diversify Endeavors revenue, with its direct ownership of sports properties accounting for 20% of the companys proceeds and events accounting for a whopping 43% in 2019. Its traditional representation business brought in 36% of revenue.

Endeavor built upon its relationships with talent to begin functioning like a traditional Hollywood studio, financing and producing entertainment content. It has bankrolled or sold more than 200 projects, including La La Land, Just Mercy and Hamilton.

Emanuel is looking for the stock offering to fuel Endeavors growth and bolster its position in an entertainment world now dominated by tech giants Netflix, Amazon and Apple. As part of the IPO, Endeavor will acquire the remaining 44% stake in the UFC that it doesnt currently own. Together with the public stock offering, Endeavor sold $1.8 billion in stock in a private placement.

Endeavor seemed primed for takeoff in the fall of 2019 when the stock sale was shelved, after the anemic Wall Street debut of indoor cycling darling Peloton and WeWorks decision to delay its offering. That derailed one of the biggest deals in Emanuel and Whitesells deal-making careers, one that would have been worth at least $1.5 billion for the duo.

Things grew bleaker as the pandemic crippled Hollywood, and Endeavor responded by laying off 350 employees last spring. Emanuel stopped drawing a salary in what amounted to a symbolic gesture (he received $14.14 million in compensation in 2020 that included a bonus for his leadership through the Covid-19 epidemic). Endeavor ended 2020 with a net loss of $625.3 million on revenue of $3.5 billion.

Its possible that Emanuel and Whitesell have more extensive holdings in Endeavor that have yet to be publicly disclosed in regulatory filings. Emanuel is also eligible to receive as much as $28 million in stock if or when Endeavors valuation tops $7.5 billion, and another $14 million for hitting certain market value thresholds.

Originally posted here:
Endeavor Lands Elusive IPO, With Emanuel And Whitesell Controlling Nearly $1 Billion In Shares - Forbes