GSP Securities LLC would rather make long-term friends than short term profits. Nowhere is this philosophy more relevant than in how we approach our buy-side advisory roles.
Buy-side advisors typically are compensated primarily on a “success fee” basis. However, a “success” for the advisor is not necessarily a success for the client. Sometimes the best deal is the one you don’t do – in which case “success” is defined as a potential purchaser passing on a given opportunity. Our buy-side advice is based on an honest evaluation of the transaction at hand, even if it means advising a client to not pursue a given opportunity. This candid approach has benefited our clients and reaffirmed their trust in GSP. We believe honest advice – even if it results in a decision not to pursue an asset – is always the best kind.
When the decision is made to pursue a sports property, GSP provides a buyer with a number of invaluable resources including:
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Market Intelligence
Our involvement in the sports M&A market and access to league officials provides us with the most accurate information on actual transaction values. There is sometimes a meaningful difference between an “announced price” and the actual value of a transaction. The buy-side valuation work we do for our clients is enhanced by our knowledge of real transaction values and our understanding of how the unannounced terms of each deal impact value.
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Due Diligence
Our sports M&A experience on both sides of the table allows us to assist clients in the due diligence process in a highly focused way. This has three primary benefits. First, we can filter out the “noise” that often comes with sell-side “data dumps” and distill the diligence materials down to the salient points. Second, we can move through the diligence process extremely quickly, providing an advantage in a competitive process where speed can be almost as important as price. Third, not only do we know what issues to look for, but also we have come across them – and addressed them successfully – before. Whether it is lease terms, change of control issues, working capital adjustments or other issues that can impact value, we know how to make sure these are addressed in negotiations.
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Documentation Negotiations
Moving from a “handshake” agreement on price to definitive documentation is a critical part of the buy-side process. Significant value gains can be won – or lost – based on what are often portrayed as the “non-economic terms” of the purchase agreement. We know what issues are “must wins” and what issues can be traded away in a negotiation. Having done more sports M&A work than any other firm, we can challenge lawyers and advisors who try to win deal points based only on the contention that a certain term is “standard market practice.” We not only know the market – we shape it.