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I could only see it happening if Fertita and company were selling out to a public company, perhaps to hold a few shares in the company going forward but no longer running it.
Fine point, except for the fact that the UFC doesn't need cash. And it makes no sense to float 10% of the capital given the greater compliance costs that will imply.
The UFC will only go public when the Fertitta brothers have the need to cash out or when they get tired of being in the limelight. And I don't see that happening.
as long as frank and lorenzo fertitta own controlling interests in zuffa (they both own 40.5% each for a combined 81%), zuffa will never be a public company.
here's the reason why:
frank and lorenzo are both billionaires. according to forbes, frank and lorenzo are each worth $1.3 billion. they have more money than they'll ever need in several lifetimes.
the ufc is profitable. the money that is needed to expand and grow the ufc in other markets such as asia, europe, mexico can be accomplished by using the profits earned by the ufc.
if more money is needed, frank and lorenzo can borrow money from the 18 casinos that they both collectively own in las vegas.
for the above reason, zuffa will never be a public company as long as frank and lorenzo control zuffa (uncle dana is a minority owner with 9% ownership in zuffa; the remaining 10% is owned by sheikh tahnoon bin zayed al nahyan).
I never said they needed cash. I simply explained why companies go public and the process. I also pointed out the greater cost of being public due to compliance.
And going public is not the best way to 'cash out' for the founders. GOing public is the best way to give liquidity or the ability to 'cash out' to the minority shareholders.
If the founders and operators try to 'cash out' in the public market they will generally find their stock going to zero before they can sell because as Insiders they must file a notice to sell their shares which spooks the market as it is seen as a lack of confidence in the company going forward.
Even in a public company Insiders with such a big stake would arrange a 'cross' or basically a private sale and then cross all the stock. Something that could be accomplished much more easily (if there is a buyer) in a private company then a public one.
So to re-iterate going public is not a good strategy for Insiders and Founders to 'cash out'.
I think they will, but, not until they stabilize their product and get it to where they would feel comfortable having others invest.
They could've gone public around 2009.
yes and yes.Yes and no.
I would not expect the UFC to have a hot IPO as I do not think the company is on a big growth curve. I may be wrong as they don't release much, but in answer to the question I was replying to an IPO would likely not be a way for Dana and Zuffa to 'cash out'. Cash out as a term generally refers to selling all or almost all of your position.Depends on the hype around the IPO.
No he did not. Not as the term is used. He sold a tiny portion of his holding to pay taxes.Zucherberg cashed out.
Right. not 'cashing out' which generally involves the sale of all or most of ones position. thus the 'out' part of cashing out.Did he dump all of his stocks? No. He sold off a pretty small percentage, actually.
Again the NEED to sell was precipitated by FB going public, and his stock options being 'in the money' thus he had to pay tax immediately to realize them. Had FB not gone public he would not have needed to pay that tax and thus would not have to sell. So he did not sell to cash up. It was basically a neutral transaction for him.But because of the mark-up even this small percent put more cash in his pocket than he was likely to earn in the next decade had he not gone public... and there's always tomorrow for the rest.
This here is some BS.Warren Buffet makes billions by buying up huge holdings and then selling them off. Those stocks take a big hit when he sells them, too.
Buffets a value buyer who likes to by and hold and invest. Yes his investments usually grow, but no you are wrong if you think they basically go back to neutral upon sale.But that's neutralized somewhat from the fact that his purchase gave the stock a big bump in the first place, which is compounded by the fact that he negotiated a crazy discount when getting in.
What is cheap? For Zuffa it is doubtful the market would put any big forward value on the stock. It would likely LIST cheap and if they announced they wanted out, with all the uncertainty over who would run it and how would it be run, the stock would likely plummet.The point is, you can announce you are going to cash out big, watch the stock tumble somewhat, and still run away with truckloads of cash, so long as you got in cheap.
You watch too much TV. I have orchestrated several IPO's for several companies from front to back. Other then a few FB look cases the vast, vast majority of them are priced based on comparables and a Price too Earnings ratio.A well timed IPO does precisely this; it can grow the value (or 'price' to be more accurate) of your holdings tenfold over night.
k.If it does, you can sell off 10% with the market hardly batting an eye, and there you are holding the entire value of what you owned yesterday in your hand in cold, hard, cash... and STILL owning the better chunk of your prior holdings in the company.
yes and yes.
I would not expect the UFC to have a hot IPO as I do not think the company is on a big growth curve. I may be wrong as they don't release much, but in answer to the question I was replying to an IPO would likely not be a way for Dana and Zuffa to 'cash out'. Cash out as a term generally refers to selling all or almost all of your position.
No he did not. Not as the term is used. He sold a tiny portion of his holding to pay taxes.
Right. not 'cashing out' which generally involves the sale of all or most of ones position. thus the 'out' part of cashing out.
Zuckerberg almost certainly had almost zero cash to pay his taxes since all his wealth was in his stock. even still FB market cap dropped by $3B on the news.
Again the NEED to sell was precipitated by FB going public, and his stock options being 'in the money' thus he had to pay tax immediately to realize them. Had FB not gone public he would not have needed to pay that tax and thus would not have to sell. So he did not sell to cash up. It was basically a neutral transaction for him.
This here is some BS.
Cite some examples please. I am a big Buffet follower and know of none of the holdings he sells typically taking a big hit.
Buffets a value buyer who likes to by and hold and invest. Yes his investments usually grow, but no you are wrong if you think they basically go back to neutral upon sale.
But again cite some examples please.
What is cheap? For Zuffa it is doubtful the market would put any big forward value on the stock. It would likely LIST cheap and if they announced they wanted out, with all the uncertainty over who would run it and how would it be run, the stock would likely plummet.
Zuffa would be far better off seeking the same buyer now in a private sale then spending the large amount of money to take and keep the company public and then risking spooking the market and driving the price down in a sale.
what you are saying may have some truth in general but we would be hard pressed to see it applying here.
You watch too much TV. I have orchestrated several IPO's for several companies from front to back. Other then a few FB look cases the vast, vast majority of them are priced based on comparables and a Price too Earnings ratio.
You make $X per share and have Y shares outstanding and your price is pegged solidly within a range of your comparables. Rarely do you see a 10X jump over night. 2X is rare and often retreats back if it does jump up. the few exceptions are purely speculative early stage companies or new disruptive tech companies (like FB) that people simply imagine huge wins with.
k.
Facing the combined burden of an
economic recession and plunging capital
markets, the IPO market turned in
its worst performance in a generation.
In 2008, there were only 31 IPOs
There are two basic reasons for going public.
The first is, as you suggest, to raise funds by selling off equity. You are correct that the Fertitta's would never have a reason to do this.
The second reason, though, is because if your timing is right in issuing an IPO, going public is the closest a private citizen can come to printing money.
When Facebook went public it sold for (excuse me if the numbers are a bit off; I'm going by memory, but they're close) 80 times what it had earned in the past year, 40-50 times what it had earned in its entire existence to date, and more than it is likely to ever earn from now until the end of time.
Say someone came to survey your land for oil reserves, and then word got out, and so much hype built up around the very possibility that you could have oil on your land that someone offered to buy it from you for the maximum you could ever hope to make IF they did find oil (which was still purely a hypothetical). Would you sell?
The closest the UFC has ever come to that situation was in 2009/2010. Chances are they could have gone public then and sold for at least a few times what it was worth then (which is probably more than it is worth now).
If they went public now, though, they would just look like they were hard up for liquidity, and would likely end up taking a hit. Defeating any purpose of going public, for all of the reasons you listed already.