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:
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.
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.
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.