Endeavor agents looking to leave company after IPO sputters

Posted by Sebrina Pilcher on Friday, May 3, 2024

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Powerful agents and high-level executives at Ari Emanuel’s entertainment firm are looking to exit stage left after the company’s initial public offering fizzled, The Post has learned.

Hollywood bigwigs at Endeavor — whose William Morris Endeavor and IMG Media talent agencies represent A-listers like Oprah Winfrey, Gal Gadot and Rihanna — have been flooding Hollywood with their résumés after a yanked September IPO kept them from cashing out on stock options they’ve been accepting in exchange for smaller bonuses, sources say.

The flopped IPO — which had been targeted to raise more than $600 million this fall — is roiling the ranks of Endeavor’s talent agents, who live and die for bonuses that can make up as much as 70% of their total compensation, according to insiders.

“A lot of WME agents are now in play. We are all talking to them,” a rival agency source said. “They are big agents, executives, department heads.”

Other sources said that Emanuel, Endeavor’s hard-charging chief executive, has been pushing stock on execs and agents in lieu of cash since 2014, when private equity firm Silver Lake became a majority investor in Endeavor, allowing it to buy IMG, a talent and marketing agency that focuses on sports and fashion.

The long-awaited payback was supposed to come this year with a big, splashy IPO that would make Endeavor executives rich — but the company, which also owns the Miss Universe pageant and half of Ultimate Fighting Championship, yanked its planned listing amid weak demand that was first reported by The Post.

Among those who may be unhappy with the situation, sources said, are IMG Media chairman Ioris Francini and Jon Rosen, a WME board member, partner and head of the agency’s East Coast TV department as well as its branded lifestyle group. The two men didn’t return requests for comment.

“While electing not to move forward with the IPO was the right decision for the company, it’s understandable that some employees were disappointed that we didn’t list,” a company spokesman told The Post. “Despite the IPO delay, 2019 was a record year for Endeavor, and we’re confident in our strategy moving forward.”

A person close to Endeavor added that “it’s possible that some are unhappy with their bonuses, which are discretionary.”

Sources say Emanuel (the inspiration behind the Ari Gold character on HBO’s “Entourage”) and Endeavor executive chairman Patrick Whitesell (who divorced Lauren Sanchez in October after the National Enquirer exposed her affair with Jeff Bezos) have been scrambling to make it up to staffers, sources said.

Nevertheless, some Endeavor employees have panned their efforts, including a plan that calls for staffers to sell up to 20% of their stock at a painful discount to the company’s already lowered pre-IPO valuation of $6.5 billion, multiple sources told The Post.

According to a person with knowledge of the plan, Endeavor has offered to buy the stock at markdowns as steep as 60% to the lowered value, which has enraged staffers. A person close to WME denied this, however, saying the discount is in the “single digits.”

Further dampening spirits, execs who choose to sell stock won’t get paid until April, sources claim. The reason for the delay is unclear, but one source said it’s because Emanuel and Whitesell plan to raise $300 million to $400 million around that same time period.

A person close to Endeavor denied the debt-laden company needs to raise money, without saying whether it will.

“The key here is that we don’t need to raise money, to pay off debt or otherwise. We’re a highly cash-flow generative business. Our plans remain ambitious and we may need additional capital to execute on those,” this person said.

Endeavor must begin chipping away at its $4.6 billion debt load with a payment of $113.8 million on Dec. 31, securities filings show. Meanwhile, the company’s plans for a $400 million investment from Saudi Arabia were quashed in the wake of the murder of journalist Jamal Khashoggi. And Silicon Valley-based buyout firm Silver Lake, which owns a 41.5% stake in Endeavor, isn’t planning to enlarge its stake, sources said.

“Silver Lake believes in Endeavor’s long-term growth prospects,” co-CEO Egon Durban said in a statement, declining to say whether it might up its stake. “We’re proud of all they’ve accomplished, and excited for all that’s ahead.”

Also affecting business is a boycott by the Writers Guild agency, which led to a slew of Hollywood writers firing their agents over fee disputes.

“If you’re a big lit agent and you were expecting a windfall from this IPO and you have no clients, things are looking very difficult,” said an agency insider.

Not all agents are restless. Right before pulling the IPO, Endeavor offered some top performers cash toward their bonuses, explaining it found extra money thanks to a tax advantage, sources said. A source close to Endeavor said the early cash payments came from the company’s 2019 bonus pool.

The Hollywood duo has also been offering to pump up cash bonuses for agents whose contracts are coming to an end, while “pleading” with everyone else to “hang tight,” sources said.

Angry staffers, some of whom are locked into years-long contracts that can’t easily be broken, are also being lured into staying with promises that “IPO discussions will resume in January,” a source said. But given how bungled the IPO process has been thus far, workers are skeptical.

Endeavor first filed its IPO paperwork in May with plans for a stock debut over the summer. The offering was then shifted to the fall, a delay that was reportedly due to the company’s plans to buy hospitality and live-events company On Location Experiences for some $700 million.

Endeavor execs were starting to grow jittery then, sources said.

“They were told ‘don’t worry about it,’” one source said. “But they have been making less based on the premise of an IPO. They have been asking people to take a flat comp with the understanding that a big liquidity moment is coming.”

The big moment seemed to arrive in September as Endeavor priced its stock to sell at $30 to $32 a share, giving a valuation of roughly $8 billion.

As the IPO date neared, however, the company lowered the price range to $26 to $27 a share, slashing Endeavor’s value to $6.5 billion. On Sept. 26, the day before the shares were slated to begin trading, Emanuel and Whitesell pulled the IPO after orders started coming in as low as $20.

At the time, Emanuel blamed the depressed IPO market, which was tanking shares of newly listed companies like the indoor bike company Peloton and ride-hailing apps Uber and Lyft.

“This was cover for them. This had nothing to do with a stationary bike company,” one source opined, pointing to Endeavor’s hodgepodge of assets and hefty $4.6 billion debt load.

Anger inside the company came to a boiling point when Emanuel, Whitesell and Endeavor president Mark Shapiro were spotted sitting courtside at the NBA season opener of the Clippers vs. Lakers on Oct. 22.

“They were smiling and yucking it up and it was only a few weeks after a botched IPO,” said a source. “They thought they would put on a happy face, but it backfired. The buzz around town is that it made a lot of people feel like s–t.”

Staffers griped that Emanuel and Whitesell could afford to smile because, according to filings that emerged during the IPO process, they had sold a bunch of their stock for $165 million each to WI Investment Holdings — an entity mostly owned by affiliates of Silver Lake and WME Holdco — back in 2017.

“They paid themselves before they paid anyone else,” griped a source.

“There were rumors that Ari and Patrick would pay out of their own pockets, but that’s not happening,” an insider added.

Despite the uproar, a source close to Endeavor said many executives are hard-pressed to leave because they’re locked into contracts and collecting commissions tied to their clients. Many also have stock awards that haven’t yet vested and which can’t be cashed in if they’re not at the company if and when it goes public.

Tied to their desks or not, some insiders are holding out hope that Emanuel — a tenacious businessman whose WME just poached Angelina Jolie from rival agency UTA — will eventually come to their rescue.

“You can’t count WME or Ari Emanuel out,” an insider said.

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