Endeavor has taken a bold step into the public equities markets. Now what?

Endeavor president Mark Shapiro enthused on Thursday that the IPO, which launched the stock at $24, marks the beginning of a new chapter for the company that has been through a fair amount of turmoil and transition over the past few years. The ringing of the NYSE bell at 9:30 a.m. ET by Endeavor CEO Ari Emanuel coincided with a “big sigh of relief” from thousands of staffers at the parent company of UFC, WME, IMG and other content-focused brands. It was a moment of delayed gratification given that Endeavor previously tabled its IPO plan amid lukewarm investor response in September 2019.

“Since the IPO didn’t take, some [employees] have been living under a cloud of negative press and attention about what’s going to happen. ‘Can we do it again? Did the pandemic sink us?’ All these negative headlines that don’t jibe with the story that they’re living,” Shapiro told Variety. “This allows us to now turn the page.”

Endeavor made it to the NYSE, even after its bottom line in 2020 was walloped like every other media company by the pandemic. General market conditions are much more frothy than the more dour market for media in the fall of 2019. But Endeavor’s fundamentals haven’t changed much. The company at present is burning through its free cash flow, according to its financial disclosures, and has added significantly to its debt load. Revenue growth has been spurred by an acquisition spree of more than 20 companies over the past 10 years.

How will the books look to investors in a few months from now when Emanuel and Shapiro preside over their first earnings conference call with Wall Street analysts?

“We are in the growth stage right now. We’re in the investment stage,” Shapiro said. “We’re in the right areas of business for where consumers and clients want to be: content, distribution, experiences, live events, marketing, audio. Our platform and our representation businesses has us in a unique position to serve each of those parties in a high-quality way with high-quality returns. We’re going to keep investing in our platform, our clients and our partners. The growth story is ultimately going to tell itself.”

Endeavor still has acquisition targets on its shopping list, with a focus on “add-on or tuck-in opportunities” that fit within its areas of focus of sports, entertainment, fashion, live events, content production and distribution and, of course, representing top artists, athletes, actors, writers, directors and producers through WME and IMG.

Shapiro added that paying down the mountain of debt that stands at $5.9 billion is also a high priority. The company aims to get to a debt leverage ratio of less than four times its adjusted earnings, which is still on the high side.

As part of the IPO process, Endeavor also raised about $1.7 billion from private investors to fund its buyout of the remaining half of UFC. The MMA league is a huge generator of revenue and earnings before interest, taxes depreciation and amortization. It is also a lucrative platform with a built-in audience that can be used to the benefit of other Endeavor companies and clients, and vice versa.

“Having UFC gives us great flexibility when it comes to cash flow and give us the ability to fully leverage UFC across the Endeavor platform,” Shapiro said. He credited UFC’s activity with helping to provide “reserves that helped us power through the pandemic.”

The IPO promises to bring a windfall of compensation to Endeavor insiders, many of whom have deferred bonuses and compensation with the promise of stock awards in the future. Now, however, Endeavor and its operations will be under much stricter scrutiny, something that has weighed on the minds of some WME insiders as the IPO date approached. There’s a reason why ICM was the last major Hollywood talent agency to be part of a public company in the 1980s. Representation can be highly lucrative but also volatile given that the key assets — clients — can walk out at any time.

Shapiro said he sees the IPO as a “cathartic moment,” especially for those who have been with the company for some time. He is preaching the same message internally as he is to investors.

“This is a long game. This isn’t about one day, one week,” he said, pointing to the trajectories of Facebook and Snap after IPOs that were seen as underwhelming at the start.

Now that Endeavor’s fortunes can be tracked in real time from 9:30-4 p.m. ET on weekdays, Shapiro will advise employees to keep their eye on the big picture.

“Don’t be checking the stock symbol every 10 seconds. Don’t let it gauge your mood. Don’t get high on the highs and low on the lows,” Shapiro said. The benefit to equity compensation, he added, “is that everyone is incentivized to be rowing the boat in the same direction at the same cadence.”

Shapiro credited the work of long-serving employees at WME and IMG for laying the foundation that allowed Endeavor to become a true conglomerate.

“This is a very cathartic moment for a lot of longtime employees at IMG and WME, especially the folks that have gotten behind Ari Emanuel’s vision. They’ve been patient, they’ve been creative and they’ve been nose to the ground trying to knock down new business.”