Endeavor’s deal is a fitting end to a sorry show

With so many luminaries on scene from Hollywood, Wall Street and Silicon Valley, ordinary shareholders in Endeavor could feel like faceless extras. They certainly should after the entertainment group announced a long-expected go-private sale to its existing majority shareholders this week.

The deal values Endeavor’s equity at $13bn. But the $27.50 a share deal price is just 15 per cent above its April 2021 initial public offering price. In that time, shares in music promoter Live Nation have jumped almost 30 per cent.

The buyer group includes the likes of Silver Lake, superagent Ari Emanuel and his sidekicks Patrick Whitesell and Mark Shapiro as well as a medley of wealth funds and other large institutional investors. Half of Tuesday’s press release was dedicated to the phalanx of lawyers and investment bankers needed to untangle this web.

Endeavor never really caught the fancy of the large mutual funds. Its hodgepodge included a legacy talent management agency as well as live events and a mixed martial arts league. Add in a complex ownership structure with multiple share classes, and Endeavor may fare better with the Masters of the Universe sorting it out among themselves in private.

But, as relates to the takeout price, public shareholders will not even be afforded a vote to give their approval. Silver Lake and Emanuel have relied on their supervoting power to cut the public out, a fitting end to this corporate governance morass.

Endeavor’s time as a public equity has mostly been a flop. It had consolidated ebitda of $900mn in 2021. By 2023, that figure had jumped to $1.2bn though the stock price had fallen below $20. One attempt to jump-start shareholder value creation — the spin-off of the highly profitable UFC mixed martial arts league — has been a disappointment.

Silver Lake and Emanuel insist that the company will fare best as a private company, less than three years after pursuing the opposite strategy. One model is the Silver Lake buyout of computing company Dell. That deal in a decade has yielded about $100bn in profits for its backers including Michael Dell.

If markets are efficient then no easy pickings should exist for Silver Lake and its team. But Endeavor’s public shareholders should be wary that they are about to be exploited by insiders who best know the company’s value and wish to keep it for themselves. With no vote, their only recourse is either trusting the independent directors of Endeavor or pursuing litigation.

The question as Endeavor goes private is if its producers could have tried harder with good governance to put on a better show.

sujeet.indap@ft.com