Patrick Whitesell to Launch Media Company With $250 Million Investment From Silver Lake as Part of Endeavor Deal

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Patrick Whitesell, executive chairman of WME parent Endeavor, is launching a new media company backed by Silver Lake as part of the private-equity firm’s deal to take Endeavor private.

Silver Lake will invest $250 million of seed equity into a new business to be founded, managed and controlled by Whitesell, according to an Endeavor SEC filing Wednesday. The agreement comes under Silver Lake’s deal to buy out Endeavor, announced Tuesday, after nearly three years as a public company that gives Endeavor an equity value of $13 billion.

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According to the filing, Whitesell’s business will include “(a) investing in and providing services to companies in the entertainment, media and sports industries, (b) developing, producing, financing and exploiting film, television and digital audio visual content, (c) talent management and (d) consulting with other entertainment companies.”

Whitesell is expected to remain with WME while running the as-yet-unnamed new company. Per Silver Lake’s employment terms with Whitesell, the exec will be appointed as a member of the board of directors of Endeavor and “if requested by the company or a Silver Lake affiliate and agreed to by Mr. Whitesell, will also be appointed as chairman of the governing body of WME.”

If Whitesell is appointed as chairman of WME at the close of the go-private transaction with Silver Lake, he will be entitled to receive quarterly royalty payments from WME equal to 2.5% of the quarterly net cash profits of the agency representation business of WME. In the event Whitesell is not appointed as chairman of WME (or if he declines such appointment) he will instead receive a lump sum payment of $60 million.

Also disclosed in Endeavor’s 8-K filing about the Silver Lake deal:

  • Ari Emanuel will be appointed CEO of the newly private Endeavor, a member of the board of directors of the company and founder and executive chairman of WME at the close of the Silver Lake transaction. At that time, he will receive a $25 million asset sale transaction bonus and will be entitled to receive quarterly royalty payments from WME equal to 2.5% of the quarterly net cash profits.

  • Emanuel will receive new equity awards in the company representing an initial award of 2.5% of the equity interests and a supplemental award of 0.5% of the equity interests, calculated on a fully diluted basis. One-third of the initial award will be options and two-thirds will be restricted stock units subject to vesting terms.

  • Starting on the second anniversary of the close of Silver Lake’s deal to buy Endeavor, Emanuel will have a one-time right to require the company to repurchase all or a portion of his company equity interests. Per the filing, “The put price per equity interest shall be (x) if within five and a half years of the effective date of the Mergers, the price paid in the Merger plus interest equal to the 10-year United States Treasury Rate, and (y) thereafter, the most recent valuation of a share of the Company adjusted for various items such as exercise price, strike price or distribution threshold, required withholding, adjustment for stock splits, reverse splits, stock dividends or similar events.”

  • Starting on the first anniversary of the deal close, Whitesell has the right to require the newly private Endeavor to purchase his equity interests in the company (under the same terms as Emanuel’s agreement above).

  • Mark Shapiro, president and COO of Endeavor, had his base salary increased to $7 million effective April 2, 2024 (up from $3 million). Shapiro will receive a guaranteed annual bonus equal to $15 million for each year during his employment with the newly private Endeavor. Shapiro is eligible to receive a cash bonus upon the completion of the Silver Lake acquisition of as much as $100 million contingent on various factors. Shapiro will receive a new equity award in connection with the transaction representing 1% of the issued and outstanding equity interests of the company, calculated on a fully diluted basis and subject to vesting terms.

  • If Endeavor accepts a “superior proposal” to Silver Lake’s offer, it would pay Silver Lake a breakup fee of $288.5 million. If Silver Lake is unable to consummate the deal, it would be required to pay Endeavor a termination fee of $705 million.

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