Our client, a company with a proven track record in the management of sports facilities, continues its expansion through the acquisition of a new sports club.
Two simultaneous negotiations are opened, one with the owner of the building where the sports facilities are located for the renegotiation of the lease agreement, and the other with the shareholders of the company for the purchase of the shares.
The first step is to secure with the owner of the building a very long term lease contract and a rent that allows our client a good return in the investment that is going to make with the purchase of the club. In this case, a reduced rent is negotiated for the first few years in order to be able to cover certain investments required for the renovation of the club facilities.
Simultaneously, subject to an agreement regarding the lease, the purchase of the shares of the company is negotiated.
The due diligence process is carried out in the usual way for a purchase and sale of shares, but as a particularity for this type of business, during the due diligence, information is collected on the schedule of commitments acquired by the club regarding the organization of championships and sporting events, since the buyer must comply with them once the club has been acquired.
Information is also gathered on the numerous sponsorship agreements for tournaments and other activities that take place at the club. These agreements generate significant revenue for clubs and it will be essential to understand the agreements in place at the time of the purchase, the commitment to current sponsors, renegotiation options, and possible incompatibilities or synergies with sponsors that our client already has at the other clubs it is operating.
Finally, it will be very important to take into account the agreements that the club has entered into with third parties for the management of the sports training schools and the operation of the cafeteria -restaurant. It is essential to understand the duration of the existing contracts with these suppliers in order to evaluate possible changes in the event that the buyer is interested in integrating these services with those currently provided at its other sports facilities.
With all of the club’s operational information gathered and the company’s potential tax and labor risks identified, the purchase agreement is drafted and an addendum to the lease agreement is prepared with the new terms and conditions agreed upon with the landlord.
To ensure a smooth transition and a progressive integration into the new management style of the buyer, it is agreed that the former club manager and selling shareholder will continue to be involved in the management of the club for a limited period of time, which will be compensated on top of the shares purchase price.
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