Negotiating equity split and structure for Coyote deal

February 25, 2026 at 09:32 AM|82 min|JD Busfield, James Adcock, James Adcock
Neutral

Bottom Line

The team debated and aligned on a negotiation strategy for the Coyote deal, focusing on justifying a low equity stake (targeting 80/20) for Coyote by arguing their assets are loss-making and the post-transaction value is created by Packet Co.'s operational expertise and risk-taking.

Key Takeaways

Equity Negotiation Strategy:: The team will argue Coyote deserves a minority stake because their contributed assets are loss-making, and Packet Co.'s operational know-how and risk assumption create all future value.

Asset Valuation Framework:: They will present a defensible range, showing Coyote's pre-transaction assets have minimal value and that a higher stake would require them to assume more risk or contribute cash.

Transaction Structure:: The cleanest approach is to contribute specific assets (not entire entities) into a new asset company to avoid successor liabilities and administrative friction, pending tax review.

Coyote's Motivation:: The deal's intangible benefits for Coyote (offloading risk, union liabilities, and unprofitable operations) are key to their motivation but won't be used to justify valuation on paper.
Action Items
Distill the equity negotiation strategy and structural proposal into bullet points and a draft term sheet for Coyote. — JD B
Prepare the requested deliverables for Coyote (lease schedule, headcount, insurance breakdown, etc.) as discussed. — JD B
Ask Coyote/Stephanie for clarification on why they have asset companies and the potential tax implications of moving assets. — James Adcock
Gather and understand the scope of Coyote's union agreements (LA commercial, NY commercial, fleet) to assess potential liabilities.
Finalize the list of Packet Co. entities and assets to be contributed, confirming which should be contributed as entities vs. assets.
Decisions
Adopt a negotiation strategy that justifies a low equity stake for Coyote (targeting 80/20) based on their loss-making assets and Packet Co.'s post-transaction value creation and risk assumption. — Collective alignment between Speaker A, B, and C
Propose a transaction structure where parties contribute specific assets (not entire entities with liabilities) into a new, clean asset company, pending review of tax implications. — Speaker A
Topics
Equity Split Negotiation Asset Valuation Transaction Structure Tax Considerations Union Agreements Org Chart / Entities

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