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The Deal: IMG Worldwide Asks Who's the Vainest of Them All

Forstmann, the private equity pioneer and a longtime friend of McCormack's, acquired IMG a year after its founder's death for about $700 million. It then became a Forstmann Little & Co. portfolio company, where, with the acquisition of collegiate multimedia pioneer Host Communications in 2007, IMG assumed the three-segment configuration it's in today.

In a year-end credit ratings update, Standard & Poor's defined IMG's segments as: Sports & Entertainment, which contains talent representation, sports marketing and sponsorship sales, as well as golf, tennis, broadcasting and fashion franchises focused on event ownership and management; Media, which ranks among the world's largest independent producers and distributors of sports and entertainment programming; and College, which manages and markets rights contracts to advertisers for a large network of colleges. And, in its most recent assessment, Moody's Investors Service put IMG's revenue for the year ended on March 31, 2012, at about $1.4 billion, on which the company reportedly generated Ebitda of nearly $150 million.

Those numbers, if correct, speak to margins of 11% -- margins thin enough, a Hollywood source said, to make traditional talent agencies Creative Artists Agency LLC and William Morris Endeavor Entertainment LLC seem like cash-flow geysers. It's no idle comparison, either, in that CAA and WME are assumed to be interested in IMG. Both are already invested sports, after all, and both have private equity backing. The latter, though, raises the troublesome question of whether TPG Capital and Silver Lake want their respective portfolio companies, CAA and WME, expanding in areas even less promising than their core businesses.

The same question deserves an answer from Madison Avenue's goliaths, too. This group of designated IMG suitors features the Interpublic Group of Cos., Omnicom Group Inc. and WPP plc, all of which also have sports divisions. And while their appetite for more is well known, so is their mandate as publicly traded companies to direct M&A more toward higher-margin, digitally driven businesses.

Taking a client to Wimbledon doesn't seem so important, anymore, once Google Inc. has captured a big chunk of his ad budget. And the fact that IMG is universally acknowledged to be well run -- by Mike Dolan, a former ad man, no less, who succeeded Forstmann as chairman and CEO in late 2011 -- renders implausible the rationale of acquiring the company to implement what a source called "major operating improvements."

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