The auction for IMG Worldwide, the sports, fashion and media talent agency, is finally kicking off.
First round bids for the company, which represents athletes and entertainers including Peyton Manning and Justin Timberlake, are due on Monday, according to people familiar with the matter. IMG is expected to sell for more than $2 billion, and potentially as much as $2.5 billion.
The private equity firm Forstmann Little acquired IMG for $750 million in 2004, and has expanded the scope of its services from talent representation to a broader array of sports and marketing services. The New York-based firm is selling assets as it winds down following the 2011 death of founder Theodore J. Forstmann.
Two bidder groups are said to be likely to make offers. William Morris Endeavor Entertainment, the talent agency run by Ari Emanuel, is working with its private equity backer Silver Lake Partners on a bid, these people said. Silver Lake earlier this year worked with Dell founder Michael Dell to take the personal computer maker private.
Creative Artists Agency, another Los Angeles, Calif., talent agency, is seen as the other frontrunner. CAA is also working with its own private equity backer, TPG. TPG and Silver Lake bought stakes in the respective talent agencies in recent years.
However Morgan Stanley and Evercore, the two investment banks working to sell IMG for Forstmann Little, have reached out to an unusually large pool of potential buyers.
As a result, several private equity firms and sovereign wealth funds may also put in first round bids. Among the other main contenders is said to be CVC, the European private equity firm. Other firms considering bids are said to include Carlyle, Bain Capital and Onyx.
KKR and New Mountain Capital are working on a joint bid, people close to the situation said. Steven B. Klinsky, the head of New Mountain, used to work at Forstmann Little.
One firm that was interested in IMG earlier this year, Colony Capital, made a preemptive bid that was rebuffed. It was not clear if Colony would participate in the auction. And Mukesh Ambani, the Indian billionaire behind Reliance Industries, which has a partnership with IMG, is also said to have lost interest.
Two other private equity firms unlikely to submit bids were Blackstone and Providence Equity Partners. Providence took a majority stake in a smaller IMG rival, Learfield Communications, earlier this month.
Another factor that could enlarge the pool of potential bidders is the strength of the debt markets. With interest rates remaining low, bidders are prepared to offer relatively little equity and instead finance most of the deal with debt.
Forstmann Little has told potential bidders it hoped to close any deal by Thanksgiving. But given the due diligence necessary, people close to the process expect the process to stretch into the holiday season.
