Negotiating Coyote/HPP Merger & Strategic Path Forward

March 02, 2026 at 10:00 AM|98 min|JD Busfield, Mikel Elliot, Vasco, James Adcock

Neutral

Bottom Line

The group is negotiating a complex, no-cash merger with HPP to acquire Coyote's distressed assets, aiming to create a right-sized, market-leading studio services platform. The deal's success hinges on aggressive terms and securing a capital partner (ADC) to pressure HPP's leadership.

Key Takeaways

Merger Structure:: The proposed deal is a tax-free asset contribution by HPP into a new "SuperCo," with no cash consideration, giving HPP a distant equity carry but no operational control.

Financial Reality:: Coyote's core business is deeply distressed, with $35M in revenue losing $20M in 2025, making HPP highly motivated to offload it.

Strategic Rationale:: The merger is seen as necessary for survival and market share capture in a distressed sector, but significant upside requires future bolt-ons (e.g., with live event player CES).

Negotiation Challenge:: HPP's Victor is a key obstacle due to ego and past resentment; the group plans to engage banker ADC to apply top-down pressure and bridge the valuation gap.

Action Items

Refine the financial model (Pro Forma 2026+) to scrub out unneeded leases, add savings from asset dispositions, and show a clearer path to profitability. — James Adcock & JD

Build scenario analysis and talking points outlining potential upside from future bolt-ons (e.g., with CES) to make the investment case more attractive. — James Adcock

Set up a meeting with investment bank ADC (Juliette) to present the refined model and strategy for the HPP deal. — Mik

Review and develop a strategy for handling the union agreements (CBAs) that will be received from HPP, as this is a critical risk. — James Adcock

Decisions

Proceed with a refined, aggressive merger proposal to HPP, focusing on taking only core Coyote assets (transpo, pro supplies, locations) and excluding problematic real estate leases. — Speaker A

Engage investment bank ADC to act as a strategic advisor and apply pressure on HPP's leadership to accept the deal. — Speaker A

Schedule a meeting with ADC (Juliette) for the following week to present the refined model and strategy. — Speaker A

Topics

Coyote/HPP Merger Negotiation Financial Performance Analysis Deal Structure & Valuation Strategic Growth & Bolt-ons Negotiation Strategy & ADC Engagement

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