SCHEDULE: Soho House Merger: Goldman Sachs Rollover & Support

Sentiment:

Merger Announcement & Shareholder Agreements 19 August 2025 9:51 PM

📋All filings for Goldman Sachs Group INC

Soho House & Co Inc. details a definitive merger agreement with EH Parent LLC, outlining key shareholder rollover commitments and future governance.

Capital raiseThe Company will use its reasonable best efforts to obtain 'Incremental Equity Funding' (additional equity funding) after the date of the agreement and at or prior to the Closing of the Merger.Certain GS Funds or their affiliates will provide Soho House Bond Limited with new debt financing in an aggregate principal amount of $75 million as part of the Issuer's new debt financing in connection with the Merger.

Summary

Soho House & Co Inc. (the Company) has entered into an Agreement and Plan of Merger, dated August 15, 2025, with EH Parent LLC (Parent) and EH MergerSub Inc. (Merger Sub), a wholly-owned subsidiary of Parent.
Upon the merger, each outstanding share of the Company's Class A and Class B Common Stock (excluding certain shares) will be converted into the right to receive $9.00 in cash per share.
Goldman Sachs entities (Broad Street Principal Investments, L.L.C. and various GS Funds) are designated as 'Reinvestment Stockholders' and have entered into a Rollover and Support Agreement.
These Reinvestment Stockholders own 15,526,619 Class A Common Shares and have irrevocably designated 13,973,957 of these shares as 'Rollover Shares' to be retained in the surviving corporation.
The Reinvestment Stockholders have agreed to vote their Owned Shares in favor of the merger and against any competing acquisition proposals.
A side letter allows for a portion of the Rollover Shares (up to 7,763,310 shares) to be converted to cash at the $9.00 per share price if the Company secures the first $111,791,657 of 'Incremental Equity Funding' prior to the merger's closing.
Certain GS Funds or their affiliates will provide $75 million in new debt financing to Soho House Bond Limited (a Company subsidiary) as part of the merger's new debt financing structure.
The Goldman Sachs Group, Inc. beneficially owns 15,762,233 Class A shares, representing 29.4% of the Class A Common Stock and approximately 1.1% of the aggregate voting power of the Company's Class A and Class B Common Stock outstanding as of August 14, 2025.
The post-merger Board of Directors will consist of seven members: three designated by Yucaipa, two by MCR Investor, one 'Designated Director' (Ashton Kutcher), and one 'RC Director' (Richard Caring).
The agreement details specific consent rights for Yucaipa and other shareholders on material company actions, including equity issuances, significant debt, and changes to the business scope.

Sentiment

Score: 7

Explanation: The filing outlines a clear path for the company's merger, securing significant shareholder support and new financing, indicating a structured and agreed-upon strategic direction. The terms appear to be the result of a negotiated agreement, providing certainty for the transaction.

Positives

The merger agreement provides a clear path for the company's future, backed by significant shareholder support from Goldman Sachs entities.
The option for Goldman Sachs entities to convert up to 7,763,310 Rollover Shares into cash provides flexibility and a partial liquidity event for these investors.
The commitment of $75 million in new debt financing from Goldman Sachs affiliates helps secure the capital structure for the post-merger entity.
The detailed governance framework, including board composition and consent rights, provides clarity on decision-making post-merger.

Risks

The merger's consummation is subject to satisfaction or waiver of certain conditions outlined in the Merger Agreement.
Failure to obtain 'Incremental Equity Funding' could impact the cash conversion option for a portion of the Rollover Shares.
The reduction in MCR Director seats and potential changes to Designated Director appointments are contingent on meeting specific Consolidated Adjusted EBITDA thresholds by certain dates, which introduces performance-based risk to board representation.
The agreement includes various consent rights for major shareholders (Yucaipa, MCR Investor), which could lead to potential disagreements or delays in strategic decisions if not aligned.

Future Outlook

The company is set to undergo a merger, transitioning to a privately held entity. Post-merger, a new governance framework will be in place, defining board composition, shareholder rights, and decision-making processes. There is a potential for a Qualified IPO in the future, which can be initiated by Richard Caring under specific conditions after two years from the effective date. The company also aims to secure additional equity funding to optimize the capital structure.

Management Comments

Andrew Carnie, Chief Executive Officer of Soho House & Co Inc., signed the Rollover and Support Agreement and the GS Funds Rollover Side Letter on behalf of the Company, indicating management's commitment to the transaction.
Dennis van Laer, Managing Director/Vice President of Goldman Sachs Asset Management, L.P., signed on behalf of the Goldman Sachs entities, signifying their agreement and participation in the rollover and support arrangements.

Industry Context

This filing reflects a significant private equity transaction in the hospitality and members' club sector, where a publicly traded company is being taken private. Such transactions often aim to provide greater operational flexibility, reduce public reporting burdens, and allow for long-term strategic investments away from quarterly market pressures. The involvement of major financial institutions like Goldman Sachs and Yucaipa underscores the continued interest in and valuation of established brands within the experience economy.

Comparison to Industry Standards

The per-share cash consideration of $9.00 is a specific valuation for Soho House & Co Inc. in this private transaction. Without detailed financial performance metrics for Soho House in the filing, a direct comparison to global benchmarks or specific comparable companies (e.g., other luxury hospitality groups, private club networks) is not possible based solely on this document.
The structure involving a 'rollover' of existing equity by key investors (Goldman Sachs entities) is a common feature in private equity buyouts, allowing existing shareholders to maintain a stake in the private entity and align interests with the new ownership group.
The inclusion of specific EBITDA thresholds for governance changes is a typical mechanism in private equity deals to tie investor control and rights to the operational performance and financial health of the acquired company.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Executive Officer	NA	Andrew Carnie	NA	Confirmed as CEO signing on behalf of the Company in the agreements.
Initial Chairman of the Board	NA	Ronald Burkle	Effective Date of Voting Agreement	Designated as Initial Chairman in the new governance structure.
Vice Chair of the Board	NA	Tyler Morse	Effective Date of Voting Agreement	Designated as Vice Chair in the new governance structure.
Board Director (Designated Director)	NA	Ashton Kutcher	Effective Date of Voting Agreement	Designated as a Director in the new governance structure.
Board Director (RC Director)	NA	Richard Caring	Effective Date of Voting Agreement	Entitled to designate one Director in the new governance structure.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Composition	The Board will be comprised of seven directors: three designated by Yucaipa, two by MCR Investor, one 'Designated Director' (Ashton Kutcher), and one 'RC Director' (Richard Caring).	Effective Date of Voting Agreement	Establishes a new power-sharing arrangement on the board, reflecting the new ownership structure post-merger.
Non-Voting Board Representatives	Additional non-voting representatives will be appointed to the Board, entitled to receive board materials and attend meetings, but without voting power or quorum contribution.	Effective Date of Voting Agreement	Provides certain stakeholders with oversight and information access without direct decision-making authority.
Director Appointment and Removal Rights	Specific shareholders (Yucaipa, MCR Investor, Caring) have rights to designate and remove directors, with certain conditions tied to share ownership and financial performance (Consolidated Adjusted EBITDA thresholds).	Effective Date of Voting Agreement	Ensures key investors maintain proportional representation and influence on the board, with mechanisms for adjustment based on company performance and ownership levels.
Shareholder Consent Matters	Certain material actions require affirmative written approval from Yucaipa (e.g., equity issuance, significant debt, CEO/CFO hiring/termination, IPO) or a majority of other adversely impacted shareholders (e.g., disproportionately adverse amendments to organizational documents).	Effective Date of Voting Agreement	Grants significant control and veto power to major shareholders over critical strategic and financial decisions, ensuring their interests are protected.
Affiliate Transaction Approval	Affiliate transactions involving Yucaipa or the MCR Investor require affirmative written approval from a majority of disinterested and independent directors on the Board.	Effective Date of Voting Agreement	Aims to ensure fairness and prevent conflicts of interest in dealings between the company and its major shareholders or their affiliates.
Share Transfer Restrictions and Rights	New restrictions on share transfers are introduced, along with 'Right of First Offer' (ROFO), 'Tag-Along Rights', and 'Drag-Along Rights' for shareholders, defining how shares can be sold or acquired.	Effective Date of Voting Agreement	Provides a structured framework for liquidity and control over share ownership, facilitating potential future exits or consolidation of ownership.

Legal Proceedings

The Goldman Sachs Group, Inc. settled with the SEC in October 2020 for $400 million civil penalty and $606.3 million disgorgement related to internal accounting controls and 1MDB transactions.
Goldman Sachs & Co. LLC settled with the SEC and CFTC in September 2022 for $125 million and $75 million civil penalties, respectively, for failing to maintain and preserve certain business communications.
Goldman Sachs settled with the SEC and FINRA in September 2023 for $6 million each regarding inaccurate blue sheet reporting.
The Goldman Sachs Group, Inc. settled with the SEC in September 2024 for $300,000 for late Section 16(a) reports.

Related Party Transactions

The Rollover and Support Agreement and associated side letters are related-party transactions between Soho House & Co Inc. and Goldman Sachs entities (Reinvestment Stockholders).
Certain GS Funds or their affiliates will provide $75 million in new debt financing to Soho House Bond Limited, which is a related-party transaction.
The Voting Agreement includes provisions for 'Affiliate Transactions' which require specific board approvals (majority of disinterested and independent directors) if they involve Yucaipa or the MCR Investor or their affiliates.

Stakeholder Impact

Shareholders: Those not rolling over their shares will receive $9.00 cash per share, providing a liquidity event. Reinvestment Stockholders will maintain an equity stake in the private entity, with potential for partial cash exit if Incremental Equity Funding is secured.
Employees: The agreement outlines a new governance structure, including roles for key executives like the CEO and Vice Chair, providing clarity on management's reporting lines and responsibilities post-merger.
Creditors: Existing senior secured notes of Soho House Bond Limited will be repaid, and new debt financing of $75 million will be provided by Goldman Sachs affiliates, restructuring the company's debt profile.
Management: The Board's powers and consent rights of major shareholders will influence strategic and operational decisions, requiring alignment with key investors.

Next Steps

Consummation of the merger between Merger Sub and Soho House & Co Inc.
Efforts by the Company to obtain 'Incremental Equity Funding' prior to the merger's closing.
Execution of a new Voting Agreement at the Closing of the Merger, defining post-closing governance, transfer provisions, and liquidity rights.
Repayment of all existing senior secured notes issued by Soho House Bond Limited.
Delisting of Class A Common Stock from the NYSE and subsequent deregistration pursuant to the Exchange Act after the merger's effective time.
Potential initiation of a Qualified IPO process by the Board, or at Richard Caring's request under specific conditions, after two years from the effective date.

Key Dates

Date	Description
08/14/2025	Date as of which Class A and Class B Common Stock outstanding figures were disclosed.
08/15/2025	Date of the Agreement and Plan of Merger, Rollover and Support Agreement, GS Rollover Side Letter, and GS Voting Agreement Side Letter.
08/18/2025	Date of the Issuer's Form 8-K filing with the SEC disclosing the Merger Agreement.
12/31/2026	Date from and after which shareholders may transfer shares to any person, subject to certain conditions.
06/30/2028	Date by which Yucaipa shall notify shareholders if the Consolidated Adjusted EBITDA Threshold is reasonably expected to be met.
12/31/2028	Trigger Date for certain governance changes, specifically related to MCR Director reduction if Consolidated Adjusted EBITDA Threshold is not met.
12/31/2029	Date related to the 'Second Extension Determination Date' for the term of the Voting Agreement, contingent on Consolidated Adjusted EBITDA.
12/31/2030	Termination date for the Voting Agreement, unless extended, and a potential 'Director Transfer Date' for board composition changes.

Recommendation

hold

The filing details a definitive merger agreement with a set per-share price, limiting significant upside potential for current shareholders. The stock is expected to trade close to the offer price until the merger closes. For shareholders involved in the rollover, the future value is tied to the performance of the private entity, which requires a long-term view and understanding of the private market dynamics.

Keywords

Soho House, Merger Agreement, Goldman Sachs, Rollover Shares, Private Equity, Corporate Governance, Shareholder Agreement, EH Parent LLC, Yucaipa, Hospitality, SEC Filing, Schedule 13D

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