Why IMG Worldwide Is Being Put Up for Sale (Analysis)
The planned 2013 sale of IMG Worldwide is the result of an upcoming cash-out by several investors in a fund that backs the global talent management, television production and licensing firm, two sources with knowledge of the situation told The Hollywood Reporter.
The company is slated to be sold by private-equity firm Forstmann Little & Co. because a handful of limited partners in one of its funds have investment agreements that are set to expire in June, necessitating the sale, sources said. These partners, including Boeing Co. and General Electric Co. pension funds, have economic interests in IMG through their investments with Forstmann Little.
The investors' 10-year agreements with Forstmann Little were set to expire in June 2012, but the partners agreed to extend their deals for one year "because the companies were doing so well," a source said. IMG is expected to be put on the market by April, though it is possible that Forstmann Little could ask the fund partners to again extend their agreements, which could delay the prospective sale.
IMG spokesman Jim Gallagher told THR that the New York-based firm "is not for sale at this time. The focus of the management of IMG is on continuing to grow the company's worldwide businesses and make them as profitable as possible." Boeing and General Electric declined comment.
New York-based Forstmann Little bought IMG in 2004 for about $700 million shortly after the death of company founder Mark McCormack. A source said that IMG could now fetch in the range of $3 billion. Although IMG has a talent management division with particular strength in the sports, music and fashion worlds -- representing such stars as Heidi Klum, Justin Timberlake, Peyton Manning, Rafael Nadal and Taylor Swift -- it is unlikely that a Hollywood talent agency would buy the company. Private-equity firms with media and technology holdings are likely to be interested IMG because of its diverse business units.
IMG has several divisions, including a television unit that distributes and produces sports programs and a brand consulting group; the company's IMG College unit handles multimedia, marketing, ticket and branding/licensing for more than 200 collegiate properties, including the NCAA. IMG also has various international joint ventures, including a partnership with India's Reliance Industries that markets and promotes the All-India Football Federation. The company was headed by Forstmann Little founder Ted Forstmann until his death late last year. Forstmann friend and CAA co-founder Michael Ovitz allegedly attempted to prepare the company for sale and assume control himself while Forstmann was ill.
Although no investment bank has been chosen to represent IMG in the sale process, Goldman Sachs, which is engaged in selling gym chain 24 Hour Fitness for Forstmann Little, would be a logical choice. "They probably have a leg up," a source said.
IMG was rumored to be up for sale in early 2012, but CEO Michael Dolan told the Wall Street Journal in an April video interview that the firm was not on the block. "We've told everybody that, and we mean it," he said.
Forstmann Little and Goldman Sachs declined comment.