In a historic move, private equity firm Silver Lake Capital is set to lead the largest privatization in media and entertainment history with its acquisition of Endeavor. The deal, valued at a whopping $13 billion, comes after three years of Endeavor being a public company, during which its stock price valuation failed to meet investors' expectations.

As part of the privatization process, Silver Lake's plan includes an investment of $250 million of seed equity into a new business to be founded and managed by executive chairman Patrick Whitesell. This new venture will focus on investing in and providing services to companies in the entertainment, media, and sports industries, along with activities such as content development, talent management, and consultancy with other entertainment firms.

While Whitesell will continue to be a significant shareholder and board member of Endeavor, as well as remain involved in the central role of WME, he will also branch out with his new company. Details about this new venture were scarce in the recent Securities and Exchange Commission (SEC) filing, which primarily outlined new contract details for Endeavor's top executives.

Speaking of the executives, the filing revealed that CEO Ari Emanuel and COO Mark Shapiro will be leading Endeavor under the new ownership. Shapiro's base salary is set to rise to $7 million per year as of April 2, 2024, accompanied by a guaranteed annual bonus of $15 million. Additionally, Shapiro will be eligible for a $15 million transaction bonus upon the privatization of Endeavor and a $10 million retention bonus. He also has the potential to earn a maximum cash bonus of $100 million upon the completion of qualified asset sales.

Furthermore, the filing disclosed that Emanuel will receive a $25 million "asset sale transaction bonus" following the sale or disposition of specific assets. The details triggering this bonus, however, remain unclear. Additionally, Emanuel will receive a quarterly royalty payment equivalent to 2.5% of the net cash profits of WME's agency business.

Notably, the filing mentioned that both Emanuel and Whitesell will be given one of Endeavor's private planes. It clarified that neither executive will receive a tax gross-up unless the other party receives one as well. The 255-page document also highlighted the prospect of Endeavor exploring potential asset sales, with exceptions for TKO Group and WME. TKO Group, which includes the UFC business, was combined with WWE when Endeavor acquired it from Vince McMahon and falls under the Owned Sports Rights division. The others include Events, Experiences & Rights, Representation led by WME, and Sports Data & Technology.

With the landmark privatization move, Silver Lake Capital aims to reshape Endeavor's future trajectory, bringing together its robust expertise in private equity with the vast potential of the media and entertainment industry. As the merger progresses, the industry will eagerly await further developments and the impact this transformative acquisition will have on the market.

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