With the rapid expansion and rise of electronic dance music (EDM) and the big business it has become, media mogul Robert F.X. Sillerman is ready to bring his company SFX Entertainment to the public in a move that could see the company compete with the likes of Live Nation and AEG in the EDM realm.
According to Forbes.com:
On Tuesday, SFX Entertainment filed an S-1 with the Securities and Exchange Commission to hold an initial public offering that hopes to capitalize on the growth of electronic dance music, or EDM, culture and events. In a long-anticipated move, SFX plans to raise up to $175 million with its IPO as it scales and becomes a more formidable opponent to established promoters like Live Nation Entertainment and AEG in the electronic music space.
In its company overview, SFX, which will trade on the Nasdaq with the symbol SFXE, stated: “We view [electronic music culture] as a global generational movement driven by a rapidly developing community of avid followers among the millennial generation.”
Basically, what this means, is that some of the benefits of moving a private company (such as SFXE) into the public forum are:
-Greater access to more sources of capital
-Cheaper cost of acquiring
-The use of stock options to attract and retain company officers and key personnel
-The public image of the company is enhanced with greater prestige
-The company stock can be used for Mergers and Acquisitions
-Provides an exit strategy for early investors
The company is banking on EDM not just as music, but as a culture for the millennial generation. In its company overview, SFX, which will trade on the Nasdaq with the symbol SFXE, stated: “We view [electronic music culture] as a global generational movement driven by a rapidly developing community of avid followers among the millennial generation.”
The plan for SFXE by filing the IPO (click here for an explanation) is to take the proceeds (which is estimated at $175 million) toward “funding the cash portion of several” planned, but uncompleted acquisitions of EDM brands, such as taking over majority control of ID&T, the promoter behind Tomorrowland and Sensation; Made Event (Electric Zoo); i-Motion, owner of Germany’s Nature One event; and Onelove Group, produces of Australia’s Stereosonic festival.
According to a report from this year’s International Music Summit in Ibiza, Spain, the EDM industry as a whole could be worth more than $4.5 billion on an annual basis. In the Forbes article, SFX “has spend about half of its proposed $1 billion to buy up promoters and related dance music companies” (according to sources), which already include full ownership stakes in Disco Donnie Presents and Beatport. Sillerman also told Forbes last year that he expects SFXE to complete a total of anywhere from 30 to 40 acquisitions.
In other words, there is some seriously big business going on here. With the rise of the electronic dance music scene, and fans exceedingly willing to pay exorbitant ticket prices to see their favorite DJ’s, expect your wallets to get taken advantage of in both the short and long term.