Endeavor, the owner of WME, IMG, and a majority stake in TKO Group, has announced a formal review to evaluate strategic alternatives for the company, according to a statement released on Wednesday. The decision comes as Endeavor seeks to address what it perceives as a dislocation between its public market value and the intrinsic value of its underlying assets.

Endeavor CEO, Ari Emanuel, stated, "Given the continued dislocation between Endeavor's public market value and the intrinsic value of Endeavor's underlying assets, we believe an evaluation of strategic alternatives is a prudent approach to ensure we are maximizing value for our shareholders."

The executives at Endeavor have expressed their dissatisfaction with the market valuation of the company, comparing it to recent transactions in the industry. CAA recently sold a majority stake, valuing the company at $7 billion, while asset sales such as IMG Academy and Endeavor Content have fetched substantial sums.

During a Bloomberg conference earlier this month, Emanuel highlighted the disparity, stating, "They got valued at 15 times [revenue] for the agency business. Quint - which is an experiences business, same as my business On Location - just got valued about 15 times [in its September sale to Liberty Media]. I just sold IMG Academy which I got zero value for, for $1.2 billion. I sold my production company for a billion dollars and then I have a betting business in Open Bet. I'm not getting any credit for any of those things."

While the talent agency WME remains a significant revenue contributor to Endeavor, the company also owns various other entities, including IMG, the Open Bet sports betting data service, the On Location live events business, the advertising creative agency 160 Over 90, Professional Bull Riders, the Frieze Art Fair, and the Miami Open tennis tournament, among others.

It is not clear what specifically prompted the decision to initiate the review of strategic alternatives. However, Endeavor believes that potentially selling parts of the company or exploring other options may unlock greater value for its shareholders.

Last month, Endeavor merged its UFC business with the WWE, forming TKO Group Holdings, which is led by Ari Emanuel and Mark Shapiro. While the TKO stake is not part of the current review, the spinoff did create value by separating the UFC business from the core Endeavor operations.

Mark Shapiro expressed optimism about the strategic review, stating, "I think this will clear up some of the dislocation in the stock price, which is the fact that there's obviously a dislocation between the public market value and the intrinsic value of our assets."

The strategic review is expected to undergo a careful evaluation of options to ensure the maximization of shareholder value. Endeavor aims to address the gap between market valuation and the worth of its diversified portfolio of assets.