It wasn’t too long ago that the dance music community stood in awe at the juggernaut that was SFX, growing bigger and bigger by the day. It went public and acquired everything in sight, while some cheered and others scoffed. For better or for worse it was the standard bearer for EDM on Wall Street, but it turns out the EDM business simply wasn’t a good fit for a public company.
SFX took on massive losses as it acquired numerous companies including Beatport, Made Events, and ID&T. Furthermore, the losses were compounded as SFX made massive investments to start up new festival properties like TomorrowWorld, which needed a few cycles to turn a profit. SFX did not perform as expected on the stock market and Chairman Robert Sillerman is following through on his plan to repurchase all shares and take the company private. He is paying a 42% premium over his initial offer of $4.75 per share and already owns 37.4% of the company.
While this might seem like a failure for EDM, it just means that the business will be able to perform better now that it no longer has to answer to Wall Street investors who probably don’t know much about dance music and festivals. This gives SFX free reign to go about growing its properties without the critical eyes of investors and competitors all over their books. Just look at the example of TomorrowWorld, which struggled financially during its first edition but is now poised to perform much better, as things have been fine tuned over 2 previous cycles. Now, SFX can set its sights on creating more memorable events and experiences for us all. You can read the full press release here.