Episode 247: Analyzing the WWE and UFC Merger with Corey Kupfer
In recent months, the wrestling and fighting world has been abuzz with news of the merger between WWE and UFC, forming a newly created publicly traded company under the control of Endeavor Group. With Endeavor owning 51% and WWE shareholders holding 49% of the equity, there are several intriguing aspects to this deal. Primarily when discussing market reactions, risks, and reputations.
REACTIONS IN THE MARKET AND FROM THE PUBLIC
Upon the announcement of the merger, both WWE and Endeavor experienced a minor decline in their stock prices. This market reaction raises questions about the market's sentiment toward the deal. While it is essential to consider multiple factors that affect stock prices, it is clear that the reaction of key stakeholders – such as investors, customers, and employees – plays a crucial role in evaluating the success of a merger.
From the public perspective, speculation has arisen regarding the return of pay-per-view events for wrestling, which could affect the fan base and revenue streams. This is because as a part of the deal, Endeavor will acquire the assets of WWE Network, which is a subscription streaming service, and integrate those assets into ESPN+, which is owned by Disney. So, this is a move that's going to bring more content to ESPN+, which could potentially attract more subscribers and more revenue. It's a strategic move that shows how companies can use acquisitions to enhance their existing platforms and services.
It is important to note, however, that business decisions are made based on careful evaluation of the financial implications. The concerns of customers and clients are always significant in any deal, as their satisfaction and support can impact the success of the merged entity.
REPUTATIONAL RISKS AND DUE DILIGENCE
The WWE-UFC merger also brings to light the reputational risks associated with the parties involved. WWE's founder, Vince McMahon, has faced allegations of sexual harassment, which raised concerns among some observers. Additionally, allegations of retaliation and racism within WWE have highlighted potential liability and public opinion risks. Due diligence, encompassing financial, legal, and cultural evaluations, is essential to identify and address reputational risks that may impact the success of the merger.
While the concerns surrounding Vince McMahon's reputation and WWE's issues have been acknowledged, the decision to move forward with the merger indicates that UFC believes the benefits outweigh the potential risks. The appointment of McMahon as executive chairman, with limited day-to-day involvement, may be a strategic move to mitigate these risks. Ultimately, businesses must evaluate the adverse impact of reputational issues against the potential benefits when considering a merger or partnership.
The key takeaway from this deal is that while the scale of your deals may not be in the billions like the WWE and UFC merger, the fundamental principles remain the same. When considering a deal, always examine the stakeholders involved, the potential risks and opportunities, and how the deal can be structured to maximize value and manage risk. As the deal unfolds, keep an eye out for unexpected consequences and be prepared to adapt and respond.
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Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
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