You’re reading Value Add’s weekly briefing, the leading newsletter for the operating side of private equity. Here’s what you need to know this week, from insights for PE-backed executives and portco news to recent buyouts and investment trends. 

Spotlight

Silver Lake has announced the acquisition of Endeavor, a sports and entertainment conglomerate owning holding companies WME and IMG, along with assets such as bull riding league PBR, betting data firm OpenBet, marketing agency 160over90, and hospitality firm On Location. The deal values Endeavor at $25 billion, the largest PE-backed take-private deal in more than 10 years. The announcement comes three years after Endeavor initially went public and 12 years after Silver Lake first invested in the company.

In 2023, Endeavor strengthened its position in sports and entertainment by acquiring TKO, the parent company of UFC and WWE. This resulted in annual revenues increasing +36% in the “Owned Sport Property” segment to $1.8 billion in 2023. Endeavor’s overall company performance has steadily increased over the years, reporting a CAGR of +8% in annual revenue since 2021 to $6 billion in 2023, and a CAGR of +18% in adjusted EBITDA to $1.2 billion. Despite the earnings growth, Endeavor is currently trading about -25% lower than its high in 2021. 

Shortly after Silver Lake’s initial investment in 2012, Endeavor pursued an aggressive M&A strategy — something that Silver Lake Managing Director Stephen Evans suggests will continue. “Marked by more than $3.5 billion of direct investment across six distinct transactions over [the previous] 12 years. We are excited about what we can achieve together in this next phase,” he stated in a press release. 

Public market investors have been skeptical that Endeavor can effectively manage and grow newly acquired businesses in its portfolio, but some could view that diversification as an advantage.

Buyout News

Paramount has snubbed Apollo Global Management’s $26 billion all-cash offer and entered into a 30-day agreement to try to finalize a merger with Skydance Media. Apollo previously offered $11 billion to acquire Paramount’s film studio business and then matched a competing offer from Skydance. However, Shari Restone, whose family owns a controlling stake in Paramount’s parent company National Amusements, noted she would rather partner with a strategic acquirer rather than with a private equity firm. Paramount will now pause any conversations with other potential buyers for 30 days to work out a deal with Skydance Media. Paramount currently has a market capitalization of about $8.2 billion, roughly half its valuation in 2019. (Source)

EQT has acquired Avetta, a software developer of supply chain risk management tools. The transaction values the company at more than $3 billion, including debt. EQT invested because it believes AI automation will be a critical capability for companies managing the complexities of supply chain risk management. "Avetta's leadership position, world-class SaaS platform, and commitment to ESG represent a highly thematic investment opportunity for EQT,” says Arvindh Kumar, an EQT partner. “As one of the most active technology investors worldwide, EQT has deep software expertise and a broad network of advisors in the space.” Avetta was acquired from Welsh, Carson, Anderson & Stowe (“WCAS”) and will be a part of the EQT X Fund, which has now invested about 40% of its capital. (Source)

Marathon Partners Equity Management is encouraging Dr Martens, a footwear brand, to go private for $2 billion. The company’s share price has fallen -83% since going public in 2021, valuing the company at $1.1 billion. Marathon Partners argues the retailer’s strong brand should demand a premium over its current share price, and that the company has become “stranded and orphaned in the public markets.” European PE firm Permira owned the company between 2014 and 2021 and still owns a 39% stake.  (Source)

Sapiens International, a software maker for the insurance industry, is seeking to go private at a $2 billion valuation. The Israel-based company was initially entertaining buyout interest last summer but paused discussions due to the military conflict in the region. Sapiens posted adjusted EBITDA of $98 million for FY 2023, up +11.7% YoY. (Source)

Vista Equity has acquired Model N, which makes software for optimizing pricing and other business intelligence decisions, for $1.3 billion. It’s Vista’s fifth take-private of a technology company in the past 18 months, as lower valuations have created a buying opportunity for PE funds in the tech space. (Source)

Questions? Email us: editor@valueaddpe.com