What is Waystar Royco’s true valuation?
FT Alphaville has the answer, but we’re not sure Roman Roy does.
Fans of HBO’s acid-tongued media empire family drama Succession probably don’t care much for finance. Bar, you know, the trappings of it.
Sadly for us — or perhaps more for our close friends and family — FT Alphaville does. Lucky you guys, though.
For a while, the question of what Waystar Royco’s actual market capitalisation is has been bugging us. Before we lose you right there, it’s arguably a really an important question for the show. After all, the entire family’s opulent lifestyle rests on the business being worth something. Cruise-related warts and all. So, you wanna know roughly right?
Luckily for you, thanks to a close watch of Season Three’s episodes, including this week’s seventh, Too Much Birthday, we now have a rough idea. And, to boot, a sense of the size of Kendall’s stake.
The first clue was in the fourth episode, Lion in the Meadow. When Kendall and Logan put on a brave face to visit one of Waystar Royco’s major shareholders, Josh Aaronson, at a private island off the east coast. During a walk through the dunes, Aaronson complains he’s lost $350m, or 10 per cent, on his 4 per cent position in the company thanks to their internecine squabbling.
We’re not going to spell the maths out here, you’re all too smart for that. But that gets you to a market capitalisation of $78.8bn. Not including debt. (Which we know from earlier episodes exists in size; this is legacy media after all).
Cut to episode five, Retired Janitors of Idaho and we got a more definite idea of the valuation when, at a backstage meeting at Waystar Royco’s AGM, manchild Roman Roy reminds everyone that “we’re talking about a $85bn baby here”. So is that a $6bn rebound between episodes (a little surprising given investors don’t normally love this level of infighting), or a subtle joke from the writers that Roman doesn’t know his own company’s valuation? Or, dare we suggest, perhaps the writers aren’t keeping track? Either way, it seems we can be comfortable pegging the company’s market cap in the $80bn-ish range.
So what about the size of Kendall’s stake? Well in the most recent episode, via a birthday card that reads (what else?) “cash out and f**k off”, Logan makes an offer to buy out his son’s stake in Waystar Royco for $2,015,708,009. Two whole yards.
Here’s a screenshot of the term sheet:
Run the numbers with the $80bn valuation, and assuming no premium on the buyout offer (a big if), and Kendall owns about 2.5 per cent of Waystar Royco. Which, if you imagine 10 per cent was split equally among the four children, sort of makes sense right?
Anyway, there you have it — an answer to a question very few, if any, asked. Glad to be of service.