Hollywood Talent Firm UTA Sells Stake to Take On Larger Rivals

(Bloomberg) -- United Talent Agency, which represents stars such as Angelina Jolie and Kevin Hart, sold a minority stake to private equity firms Investcorp and PSP Investments, raising money it will use to acquire companies and bolster one of Hollywood’s largest talent shops.

The deal values the company at about $800 million, according to a person familiar with the matter. The funds may be used to acquire companies and deliver cash to partners who have held onto stakes for years, said the person, who asked not to be identified because the transaction is private.

Outside money has transformed the talent-agent business over the past few years, turning businesses that once relied a share of a client’s earnings into multifaceted media companies that operate in dozens of industries. UTA, which sold a small stake to Jeffrey Ubben’s ValueAct Capital Management in 2015, has grown from just a couple hundred employees to almost 1,000 in the past few years, as it moved into new businesses like corporate marketing for General Motors Co., and representing newscasters such as Anderson Cooper.

Endeavor, previously called WME/IMG, represents Dwayne “the Rock” Johnson and Rihanna. It runs the mixed martial arts league Ultimate Fighting Championship and New York Fashion Week, while Creative Artists Agency, which handles Tom Cruise and Jennifer Lawrence, is also one of the biggest representatives of athletes and chefs.

2,000 Clients

Created in 1991 by the merger of two smaller firms, UTA has grown into one of Hollywood’s leading talent firms, with more than 2,000 clients, including Jolie and Seth Rogen. Under Chief Executive Officer Jeremy Zimmer and Co-Presidents Jay Sures and David Kramer, UTA has incubated startups such as AwesomenessTV and provided marketing support to larger corporations.

“There has never been a greater moment of change and opportunity in our industry for artists, creators an companies like ours,’’ Zimmer said in a statement.

In recent years, UTA has expanded via acquisition. The company acquired N.S. Bienstock, which represents top on-air news talent, and the Agency Group, which books tours for rock artists and other musicians. The company also bought a small stake in an investment bank led by Alan Mnuchin, brother of Treasury Secretary Steven Mnuchin.

‘American Idol’

UTA has yet to expand into sports and is just dipping into original video programming. New money from Netflix Inc., Apple Inc. and other Silicon Valley companies has led to a record amount of TV being produced, and Endeavor has created a division devoted to funding programming for its talent. UTA owns a minority stake in Core Media Group, a producer of “American Idol,” that was recently renamed Industrial Media.

“As demand for high-quality content is greater than ever, UTA is strategically positioned to benefit from the transformation in the sector,’’ said Simon Marc, head of private equity at PSP Investments, one of Canada’s largest pension investment managers.

UTA has explored raising additional capital for several years but also sought to avoid losing control to an outsider. Talent representation is a time-intensive, low-margin business, and investors expecting fat returns have often pushed for agencies to expand into new areas of business. CAA and Endeavor have sold large stakes to private equity groups. ICM Partners sold a stake in 2006 to private equity firm Rizvi Traverse Management, only to repurchase the interest a few years later.

“Investcorp has been impressed with UTA’s market position, the long-term growth it has enjoyed, and recognize that its future success will be driven by the continued excellence of its partners in providing superior services for its clients,’’ David Tayeh, Investcorp’s head of private equity in North America, said in the statement.

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