CAA Leaders Outline Ambitious Expansion: An Investment Bank to Fuel Big Deals

There will be a lot of deals in the entertainment, sports and media sectors in the coming years, and CAA wants to grab a bigger piece of that pie.

On Monday, Artemis’ talent agency announced a new venture: CAA Evolution, an investment bank and consultancy focused on sports, entertainment and media clients, a venture focused on navigating a rapidly evolving market for the sector.

CAA Evolution brings together Evolution Media Capital (EMC), CAA’s commercial bank, with Michael Klein’s M. Klein & Company, to super-serve that client base through CAA’s relationships in Hollywood and Klein’s big-dollar dealmaking expertise.

CAA President Jim Burtson, CAA Evolution CEO Bob Stanley and M. Klein’s Michael Klein discussed their ambitions for the new venture in a joint interview with The Hollywood Reporter Monday morning.

“What I like about this combination and partnership is that this is an area where I believe we can provide tremendous insight into an ever-changing, increasingly complicated sports and entertainment landscape,” said CAA Burtson. “By working with M. Klein and Michael, who I have known for a long time… we saw the opportunity to gain the resources, scale and quality advice that would increase the size of the clients we could serve in the market . and do it in a very efficient and powerful way.

EMC had a robust business, mid-market companies in the sector such as Jason Blum’s Blumhouse and Kevin Hart’s Hartbeat, and Stanley says they expect this to continue to be a growth area for CAA Evolution.

“We’re in this place where we’re going to continue to do this and you’re in an environment where the mid-cap manufacturing companies have a real opportunity to own IP and grow their business,” Stanley says. “So we’re going to continue to do that and I think we’re going to do that successfully, and we’re going to be able to do that on a larger scale based on the fact that our company just doubled in size.”

However, the new company will also scale up its ambitions to include mergers and acquisitions involving major media companies (the owners of the content companies). platformsnot just content owners), but also on sports team mergers and acquisitions, capital markets and IPO advice, activist investor litigation, and other matters.

“I think we’ll continue to do what we’re doing now at scale and help those companies build their businesses in this evolving content market,” Stanley added. “But we’re also going to a different, I would say, capitalization or deal size, which is where Michael’s expertise is, and helping these kind of larger media companies figure out where the world is going, because that’s how everything is moving. quickly, and we’re in a place where I think we have a really good perspective of where that’s going.

Klein adds that the sports market in particular has experienced explosive growth in recent years.

“What is clear is that the size and importance of the sports market has increased on multiple levels, even further than ten years ago,” says Klein. “This means that the transactions require different expertise. They require substantial access to capital injections of billions of dollars, and they have a substantial impact on the long-term value of both the investors and the sponsors, as well as the media outlets that provide this content.”

“On the media side, as Bob mentioned, there is such a transition today and there are so many parties, whether they are activist investors or others who see value in the changing landscape, that we hope we have the opportunity to capture the big expertise that CAA has to use. and perhaps some of our skills to add value to participants in that market,” he adds.

Klein, who previously led Citibank’s investment bank, started his own firm in 2012 and advised deals such as the $130 billion merger of Dow Chemicals and DuPont, or the $25 billion IPO of Saudi Aramco in 2019. M. Klein & Co. will continue to operate as its investment bank. own separate consultancy firm outside the sports, media and entertainment sector.

He tells THR that CAA Evolution is its first consultancy built around ‘pure industry expertise’. Klein says he knows he goes back to Burtson’s time as a director at Time Warner, and with Stanley on both purchase and sale transactions.

“First and foremost, CAA is unique and exceptional as a partner,” says Klein.

CAA is of course in its own moment of transition. The agency sold a majority stake in September to Artemis, the investment fund controlled by luxury goods magnate François-Henri Pinault.

CAA Evolution is perhaps the company’s biggest strategic move since the acquisition, taking on established players in the media, entertainment and sports banking sectors such as The Raine Group and LionTree.

Of course, the market for mergers and acquisitions, initial public offerings and other investment banking services has cooled over the past year as interest rates have risen and concerns about the macroeconomy have subsided.

Executives say they expect the pace of dealmaking to increase across all sectors. “We think there will be significant velocity of transactions” in the sports LP (limited partner) market, Stanley says.

“They will be one of the largest and most important transactions in the financial world,” Klein added of sports team deals. “They also represent what bringing together primarily sports ownership, leading private equity and venture capital participants, CEOs and entrepreneurs. So there is overlap between the universes we spend our time with.”

As for the entertainment sector, “Historically there were tons of mid-market production companies, and they kind of disappeared over time,” Stanley says. “So this is a time where we can help these companies that we work with grow bigger and own their rights, own their intellectual property and effectively create long-term value through cash flow and library value.”

“The value embedded in the content and the individuals is growing at a rate that in some cases significantly exceeds the value of the institutions that own it,” Klein adds. “And that generally reflects a mismatch that needs to be addressed and adjusted, so I believe, as we have seen in many transforming industries, that there is a significant undervaluation that will be recognized over time. ”

And as the deals roll in, CAA Evolution believes it can carve out its own piece of the industry.