How To Find The Right SPAC Buyer, Negotiate Your Deal And Make The Merger Succeed - Interactive Clickable Video

Use the Chapters list below to select the part of the video you want to watch.

Chapters:

1. Agenda
2. Rod Turner's Introduction
3. Manhattan Street Capital Introduction
4. Disclaimer
5. Data on SPAC market
6. Current state of the SPAC market
7. Methods of outreach to find attractive SPAC’s & MSC SPAC matchmaker
8. Tips on negotiating a deal with a SPAC
9. How to make SPAC a merger succeed
10. Q&A – IPO with a direct listing versus SPAC
11. Q&A – Differences to IPO between - Reverse merger and SPAC
12. Q&A – Smallest target size to raise for a SPAC
13. Q&A – What is the deadline for a SPAC
14. Q&A – About SPAC pre-planned merger targets
15. Q&A – Why SPACs take long to complete the merger
16. Q&A – SPAC boom in relation with the Pandemic
17. Q&A – Options to do with the excess funds post-acquisition
18. Q&A – What is the smallest company that can go public via a SPAC?
19. Q&A – What is a typical % of ownership that a selling team retains

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Message from Rod: I made the mistake of setting my Zoom recorded view the wrong way which has reduced the recording video quality. Thank you for your understanding!

MSC is not a law firm, valuation service, underwriter, broker-dealer, or Title III crowdfunding portal and we do not engage in any activities requiring any such registration. We do not provide advice on investments. MSC does not structure transactions. Do not interpret any advice from MSC staff as a replacement for advice from service providers in these professions.

Rod Turner

Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.

RodTurner@ManhattanStreetCapital.com

www.ManhattanStreetCapital.com

Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.

THIS TEXT TRANSCRIPT HAS ERRORS IN IT THAT WERE CAUSED BY THE SPEECH-TO-TEXT CONVERSION SOFTWARE WE USED. DO NOT DEPEND ON THE TEXT TO BE ACCURATE. WATCH THE RELEVANT PARTS OF THE VIDEO TO MAKE SURE YOU ARE PROPERLY INFORMED. DO NOT DEPEND ON THIS TEXT TRANSCRIPTION TO BE ACCURATE OR REFLECTIVE OF THE STATEMENTS OR INTENT OF THE PRESENTERS. 

So the purpose of this webinar is to, is to get into how to find a suitable target SPAC buyer how to approach them, how to negotiate with them and then how to successfully combine with them. Those are the topics that we'll be covering today. My name is rod Turner. I am the founder and the CEO of Manhattan Street Capital. Briefly on me for credibility’s sake. I have, I started my career as an engineer or electrical engineer on a nuclear power station in the UK. And then I moved in, moved to the U S and then I moved into startups, entrepreneurship in the tech space, and I've had the good fortune to build six prior successful startup companies to liquid outcomes from zero to significant successes. Two of those were IPOs to the NASDAQ. One of them was Ashton Tate, which may DBAs you guys.

Some of you guys might be old enough to remember DBAs and its day. We built that DBAs to be the leading database standard on the PC and the back end of the day. And I was the VP of sales. When we went public. I had lots of other responsibilities as we built from the 12-person company. It was when I joined the team. And another one is Symantec the company, which is best known for Norton Antivirus. I was there from before we had products at, at Symantec. And it was one of the top executives there during the IPO. Was there almost 10 years and ran the largest mergers and acquisitions significantly, both primarily merging in companies that besides of all strategic acquisitions, but also acquiring companies into the divisions that I was running. I emerged in the Norton business into Symantec, which grew so fast that it became Symantec while I was leading it.

And it was a great team. It was a tremendously successful merger, very relevant to this discussion. And I've had a lot of good fortune over the years in other, in other ways, I, I, with a friend that have a venture fund and incubator or Irvine ventures in the first internet bubble, and I've made my fair share of mistakes and had my fair share or, or perhaps more than my fair share of successes. And I've learned a lot from them and I've observed a lot from other people along the way. And their successes and setbacks. Manhattan Street Capital, I launched the company six and a half years ago because of Regulation A+, which is not the focus of today's discussion, although it's an excellent funding vehicle. That was the reason I decided to launch the company, because if it's me, if it's my experience and I believe I can help a lot of companies that wouldn't otherwise have been able necessarily to raise the growth capital or to maintain control or to scale up the way that they to meet their potential to me it's a huge market over time.

We'll reach it in reggae pass. We're making progress as an industry is growing rapidly. Now courtesy of largely of COVID frankly the focus of this, this discussion of course is about SPAC. So, we'll get into that. What Manhattan Street Capital does is we post offerings in a very sophisticated in a very sophisticated website. It does a lot of things that beyond the norm and we also guide companies and advise them in order to maximize their success with Regulation A+'s. So, we aspire to be the aspirational platform with which companies raise capital via Regulation A+ to do IPOs, to list and other in secondary exchanges, it's really raised growth capital in a, in an attractive and efficient manner. That's what we are primarily about. So, moving on to the SPAC industry, before I get into the specifics, we are not a broker dealer.

We're not underwriters, we're not valuation professionals and we're not attorneys. So, the advice, the advice that I give here is in this case, it's, it's about SPAC’s. And in this stage two, we're not a broker dealer, although there is a sec letter, no action letter, which we are operating via that effective exemption to enable us to provide the matchmaker, find a service. And also, the other service we'll get into later. Please read the disclaimers that we posted in the chat box that's important. And also, if you'd like to ask questions, feel free to put the questions that you have in the chat box and at, to work. When I finished my prepared presentation, then I'll get to the questions and answer them in the order, which they are posted and then where I can add value where I can add the most value.

So please do go ahead. Feel free to do that. Okay. Yeah, we all go in, we all recording this webinar and for all of the people that attended it and those that signed up for it as well, we will be sending out the recording of that in a clickable index form, in a blog post on Manhattan Street Capital. So, it's convenient to watch the bits you want to watch and not have to watch the rest of it. And that'll go out in about a week and a half, depending on workload, because the effort involved is significant. These do not record the webinar yourself. There might be things that could be taken out of context that I say that we added at all the steaks that I make. We may add it down. So that's the version of it. The edited version is the one that we will be distributing.

Okay. there were two methods of viewing. You are probably very familiar these days with using zoom. So, you can use the speaker view or gallery view. So, you can see everyone at the same time, or you can see your sort of, whoever's speaking up close and personal, which is going to be me most of the time. So welcome here. Hope this is going to be a very valuable session for you. That's the purpose of it is to assist you in succeeding. I am working under the, under the operating belief that most of the folks here are looking to sell their company, your company to an acquiring SPAC. But I'm also going to be including in some of the comments that I make the methods by which to succeed in the merger, because you will care about that. And you'll care about that combination. And even though if it's a simple acquisition where the SPAC makes buys one company, generally that combination is going to be really simple. You know, it won't always be that way, but then we'll get into that later. So, the topics within the subject area that we'll be covering, or what I put in the agenda in the first place, how to find the rights back for your company, how to approach them, how to negotiate the deal and how to make the merger succeed.

I have, I have been involved in directly involved in probably six or eight mergers and acquisitions, most of them on the buying side, but some of them on the selling side. So, I do have a lot of relevant experience. Although I haven't sold a company to a SPAC, I have had discussions with numerous banks. And obviously now I've had discussions with many companies that are exploring the possibility of merging with the funded SPAC. So first I'm going to go into the what's going on in the SPAC space. Obviously, the sec has tightened the reigns on SPAC’s and by doing so, I slowed the momentum somewhat, but by our count, there are 440 funded SPAC that have not yet made an acquisition. There's a lot of companies that have money burning a hole in their pocket, not necessarily building a hole, but ready to go.

The significant fact about that is that most of them have a long time. Most of them have more than a year, year and a half to run before they have to return capital back to investors. So they are, you know, variously in what I call the honeymoon phase. You know, when you start a new development project or any new project at the front end, it's really easy to have a honeymoon phase where it's slipping for every day that passes, but nobody knows because it isn't properly instrumented yet, or maybe nobody really cares because it seems so glorious. A wonderful idea that it's okay if it takes time, because it's a wonderful, nobody's being measured by any performance metrics on it yet either. So that's sort of what's happening right now because so many of these banks were funded recently. So many were funded in, in just in Q1 of 2021 first quarter of this year.

Average is about $300 billion that they have raised. And obviously many cases when they complete the transaction, they raise more money. But in terms of money in the bank already 300 is the, is the typical average, the biggest sectors our activity today have been in consumer and in health and in technology really. I know those are very broad categories, especially technology, but consumers not surprising with electric vehicles and so forth. Being a very sexy space. And as I mentioned, new deals have slowed. I'm going to pop in it two, let me just get the right screen up. And I'm going to share my screen with you. Yeah, here we go.

So, I'm going to share my screen and show you some graphics. I, we, these, these, this information that we have compiled it from a variety of third-party sources. So, I'm not yet sure if we are able, I E allowed to distribute this content. But I just want to show it to you here. So, you should be able to see I'm going to zoom this up a little bit. Okay. I can't change it terribly much. So, the points to make here, all that, going back to 2003, which is, you know, a little bit too far, the fact that these are the numbers that we've collated that joining that entire time through the middle of 2021, there have been three hundred and sixty-eight, three hundred eighty-eight completed SPAC acquisitions. That number is inflated because there were quite a few spikes, not nothing like as much as recently, but that were going on earlier in the year.

The main issue is 440 is still seeking a merger. Right now, we a bad 320 in our website, now listed in the SPAC finder, matchmaker service. So if we go down here, this is interesting. The IPO kind of SPAC’s over recent years, you can see, you know, a typical year in the past would have been 13, 14, 20 a year. When I went up, went up really in 2019 is where we saw the growth. So that's 20, 21. Even this, these numbers are probably accurate through around June, July timeframe, but this year that's a heck of a lot of SPACs that took place this year. And I'm going to pop up these, these images here to show you this is cumulative. So, you know, that does distort it a little bit, but you can tell that all hell broke loose. A lot of capital got raised in 2020 and 2021 so far, this is a breakdown of let me get some devices. This is a breakdown of the number of deals and a medium value of those deals. This is fun funded SPAC’s.

So you can see real estate, not very many deals, but on average, this is just, you know, the quantity of deals and the average side. So, it's marginally interesting. It's just more interesting this chart on, zoom it up a little bit a bit up a little bit here. Anyhow, the light blue is consumer within general and tech is, yeah, I think tech is this one and you can see health is the green one. So, I believe the light blue is, is consumer in my presentation of the information light blue hair. You can see it here, but then tech tech is old. Anyway, you can see that this is pretty big healthcare on its own is big healthcare as a sizeable segment of a couple of the others as well. I don't know how helpful that is for you, but it's somewhat interesting healthcare within financial.

Interesting. Okay. So, I'll unshare my screen and we'll go back to content. I'll answer the questions later. Okay. So essentially SPACs are a sizable phenomenon. Now they have slowed down. It looks to me like the sec is probably going to be putting in more restrictions on SPACs, but there's enough of them out there that are funded, that if you are looking to go public via a merger with a SPAC funded spine company, this is a good time. And in fact, it's a little early in terms of when their deadlines are, this is a tad early, which is a good time to prepare, right? That's kind of the way it usually works. Although if the market crashes, it won't be such a good time. So that's the, the other significant factor in play. When you look at the SPAC, the funded spikes and their disclosures via Edgar and so forth, they don't generally tell you much about what they're going to do.

They might express a general direction where they intend to acquire companies, but they've left their options open. Understandably so, so it isn't, it is difficult in the main, once you identify this back to figure out exactly what they're doing, that's a serious challenge. It's more geared for them to figure out who they want to acquire. Really. They're not making it easy for you to find them, particularly timing is key. We're keeping track of that to the, our matchmaker service. So, you know, as, as more and more companies, SPAC are funded, sorry, as more and more funded, SPACs reached the point that they don't have that much time left in order to do a deal. We'll be highlighting them. We already do, but there aren't enough of them right now to, to be exciting. Anyway, that's the fact of the matter you can go through, obviously the Edgar filings and get as much detail as you can get.

And it's very diluted. As you know, looking at those folks are fine, but it is a source getting into methods of outreach to find attractive or appropriate SPAC’s. Obviously, you can go to an investment bank and retain their services. There are many that do that. In terms of underwriters alone, when you look at who's been doing it, there are of underwriters that have more than 4% share of recent SPAC activity. There are 20, it's a very fragmented space by underwriter. It's kind of a who's who list of underwriters. It's not terribly surprising, but it is interesting to me. I was surprised how I thought it would be more concentrated than it is. That's interesting to me and the scope of the range of funding. There's a lot of concentration around you know, 2 63, 23, 30 funding, millions funded level. And there are, there are numbers numerous of them that are in the 150 million range as well. But the biggest concentration is around 300.

So, it hiring an investment bank as an entirely appropriate thing to do. I can't particularly recommend one over another, but there are many and that'll come with the approach with the attendant costs really, that's the only negative as you, you end up paying them, even if nothing happens in most cases, but nevertheless, that's a valid, a valid way to go. Another really good, probably the best way is to have somebody of high initiative, maybe yourself, maybe someone on your team do a lot of legwork, you know, go out and search the internet and find what you find. You know, the reason that we put the matchmaker service up is because in my view, when I did it as a favor for a friend, just looked online to see the internet isn't doing us any favors right now, I think 10 years ago, it was a better place to find the things you're looking for because it's essentially commercial services of one kind or another all polluting the mix.

So, you end up with a difficult, it's difficult to find stuff. So that's why we did what we did with our matchmaking service, but still it is that they're all good prospects out there. There are increasing the more and more services, subscription services and others that provide information’s, give context so that you can learn from. So that's really in many cases that will be the best way to go using some physic networking events, mostly, mostly online. You can identify people who are movers and shakers and then approach them for advice, recommendations, and suggestions. And you can meet people that way too. And then, you know, there are increasingly physical events to network with through right where you can go shake hands and, or bump fists and meet people that can lead you to, or that already evolved in an attractive SPAC that are funded. You can use our matchmaking service obviously that's a seriously huge conflict of interest that I'm getting myself into, but go ahead and use it.

It's very low-cost relative to the other options. And now we bought bank three. Actually, I think the precise number is as of today 318 funded SPACs listed. So it's a pretty good source. I think it's probably the best source of funded SPAC’s. You'll find in one place. Then we have another heavily conflicted statement. We have a SPAC finding service that we'll use for you if you choose to use it. And we have a link to that in the chat box. And essentially that's where we will advertise an email to appropriate funding SPACs on your behalf. Having figured out what the bit should be, and then all the leads go to you. So, you can then converse with the respondents converse to this banks that respond to our efforts. So that's, again, that's heavily convicted, but it does. It is there.

And it's we've had a lot of inquiries about it in terms of people doing deals in the, in the first phase of building the matchmaker, there was no sir, no fee at all. Now we have a 1% fee. If you find somebody through our service, we ask that you pay us a 1% of the deal value. Before we put that in there were three biotech companies that disappeared from all this thing and we haven't checked and we don't know if they were acquired through a SPAC or if they decided to go do something else, but we will find out in the fullness of time and you can be sure that we'll Crow it back to if they did indeed complete despite deal.

So how do you approach a SPAC buyer? You know, this is very delicate stuff. The biggest issue is that as we have found, and you will find most of the fund’s banks don't have LinkedIn links. So, you can easily track down the principals don't provide, or don't volunteer their emails. You have to go to an info kind of email to easily email them. So, we've been doing a lot of work on that. So, we are building a better and better list of people that are in funded backs that we can reach to for this, for our service. But essentially, you're going to, if you're going to use email as the outreach method, which is nothing like as good as it is usually on network, you know, if you can identify the names of people in a, in a fund that in a funded spine, rather, that is interesting to you and better yet if that was with people in it that you know, or that you have connections with through a third party, you get an introduction.

It's just like, in that way, it's like approaching venture capitalists. It's so much better when you get in by referral than when you come in and out of the, out of the big blue wide blue yonder. Yeah. So, do that, if you can, and that's where networking could come in handy, right? Within your own network and beyond if it's going to be an email approach, don't it don't expect it to be a one hit, you know, expect that it's going to be a sequence of brief and very, very succinct, brief and succinct at the same thing. Of course, you know, brief, very brief emails. If you send people longing emails, dissertations with attachments, they're just going to not see them not read them. You gotta be focused on what you say and better yet expect that it's a journey expect that they will be a sequence of communications before you're likely to get a response, because guess what, these guys are out there.

They have a lot of money sitting in the bank, and there's a lot of people that would like to deal with them as service providers and a lot of others that would like to be acquired by them. So, you need to stand out and, in my belief, and experience being brief, crisp, honest, and reasonable in your approach is smart. And absolutely not shutting the door to yourself, doing further communications, you know, keeping the door open to subsequent emails. If that's all you're using these days, you can do very, very pinpointed advertising, which is what we offer in our we'll find it, find it for you service, you know, the instrumentations with social media advertising, it's so precise. You know, a lot of these social media sites know more about us that we know about ourselves, right? I mean that at least an unbiased perspective, in some ways it's technically biased, but it's not emotionally biased about who we are and what we like, et cetera, et cetera, they know us so well.

They can, you know, really, really make, make advertising a viable method to, to attack to to attract funded SPAC, which leads me to another obvious thing, which is stand out amongst the crowd, right? Because when you look at it from a funding point of view, they are looking, they might be looking more intensely later when they have less time, but they all are looking. They've got good people looking at it through that at work and going online and the paying attention to attractive targets. So be in the news legitimately and promote your business in the normal way, but recognize that this is a seriously viable way of getting on their radar. So, they so that you show up to them that way, which is the best, right? They find you of their own effort and decide that your company is seriously engaging, seriously attractive.

And then they come knocking on your door. That's the best of all? It wasn't I mentioned it earlier, but I want to reassert it, expect it to be a process, right? When you get in the door with the door, disliked, the open, that's a, still a journey to get past it, to where you're actually having discussions and serious evaluations. The open-end direct kind of obvious, but, you know, pretending it's something else will never work. And making sure that what you present is what you have so that you don't waste each other's time, kind of obvious, but needs to be done. And again, I know I've said it earlier be brief because in my position, in, in Manhattan Street Capital, it's a standing, how many companies will send me a book, you know, or twenty-five attachments for Christ's sake, you know, in an email that's four pages long.

These are not the signs of a company that has their act together. As a matter of fact, I mean, as a matter of prejudice because of our experience, they generally don't have their act together, but it's generally actually true if I take the time to check, you know, and I'm sure you guys have had similar experiences, clearly stated succinct messages are the way to go. That's absolutely critically important. So how to negotiate a deal price, you know, you guys are probably hugely experienced and know far more than I do. You know, I have, I've done a lot of this for that. I don't pretend to; I don't pretend for one moment that I know more than you do about negotiating. I've got some tips here that I help a hopeful, but please don't think that I'm arrogantly sitting here saying, yeah, yeah. I know everything about negotiating Christ.

There's so much involved. And again, I'm sure some of you have done far more deals than I have be flexible and be pragmatic and be open because there are a lot of issues in SPAC’s that are different than a regular company buying another company, like the commitments that they've made to their investors the nature of the returns, they need the size of the deals they want. Right? So, one big constraint is that most of the spikes are funded based on making one acquisition. They're not planning to make six and then pull them all together and make it kick, amazing. The money's there, and they could do six, right? But they, if you think about when they're set up with the cost and budgeting and process budgeting the costs that goes along with doing one set of due diligence, maybe three times, because you kiss a frog twice and you, you, you know, they reject them.

The third company is a charm. That's three serially over a period of time, right. But if instead they are going, you know, your pitch is, well, my company is not quite that big, but kick. Amazing it is. And this is what we could do and bring in a couple of other companies. And now we've spent all the money you want to spend, and we've built something amazing between us. That's going to be difficult for them to bite off at first because the extra due diligence, or maybe the power I due diligence and, you know, all of that, the access costs involved. And then they don't actually know until they finish that if it's going to fly anyway. Right? So, bear in mind, those kinds of constraints. So, if it's a smaller deal, look for smaller SPACs, because there are those that might be a natural fit and just be pragmatic about it when it comes to what should the value be if you're a company.

That's a really interesting one. It's very different than when you are dealing with venture capitalists, because in that case, you know, the way that is that they ended up settling, if they're interested, usually they set the terms. Anyway, they determine how much money they're willing to put into play, which has a big role in determining the valuation they'll accept. And if you don't like it, tough luck most of the time, unless you've got a competitive bid situation going, which is rare to say the least, but great, you know, great when you get it. So, shooting high is reasonable. As long as you are not rigidly attached to a higher number. But when you think about what the dynamics are in today's markets, your company might be worth this much normally, and this much to the buyer in today's market, because it's going to be worth this much when absorbed when combined, right? So, it's an anti-dilution or an, a creative deal to the buyer because my God, you know, this technology, this opportunity, the revenue upside and the profit upside is fantastic. And therefore, bigger numbers are in play today, which is a reason why the SPACs are there because that capitalizing on the, the heat in the market and the valuation has been going along with them.

I already mentioned due diligence process recognize that that is a serious challenge. You know, they didn't set it. Most of them didn't plan to do multiple deals. So that's worth thinking about, again, logistics fitting in with the logistics of timing and of the deals and so forth, which is pretty obvious, a big one that I recommend you pay very close attention to is, you know, I must, I'm going to assume that most of you guys here are guys and gals CEOs, probably the founders are certainly CEOs of your company, and you're not used to necessarily having very powerful people on your board. Well, in some cases, you're going to have that, right? Because a lot of these facts, the reason they were able to raise the money in the first place is because they have names associated with them that have powerful reputations, potentially big egos and successful careers behind them and roles in the company.

So, in the acquiring company, so, you know, mapping out who is actually going to be there as a long-term participant in the combined entity and what role they'll have role they will have with you, Matt as intensely. Right? I did a deal. I did it. I joined the company as its CEO, where had I met with each of the board members and thought about it that hard. I wouldn't have taken the company. Instead. I was wired by the CEO. Why bought the technology? I was flattered by the deal I was offered. And the timing was right. It felt good. What an idiot I was, frankly, because some of those board members were, they were alienated from me by the size of the equity package I got in the first place. I was starting from it. You know, I was starting on the, on the, on the negative side of the of the balance sheet as it were from the get-go with people that had a lot of power over me.

Right? So, figure that out because you may not want the deal. It doesn't, it may be that you would only take the deal if you can, exit quickly, because you don't want to run your business with those people, managing you and perhaps second guessing everything you do, or some of the things you did, this is important, right? Lifestyle, your ability to Excel and succeed in the fact that you've perhaps or been doing your own thing for a long time. And aren't quite familiar with having to answer to people that you don't really get on very well with. Like, so figure that time. It's obvious, but this really, it's negotiating the deal as to getting a success long-term and one that you can live with, not so much what the deal terms are, and this is really obvious, but I'm going to mention it because it does help.

Some people, you know, you want to go shake when you actually get to the point that you are negotiating. You don't want to be rude. You don't want to say off. That's not acceptable. You know, we'll probably edit that when we do the editing, but you don't want to swear at them and say a flat out, no, but you also don't want to say yes, because they've reached a point where it's getting painful. What I do in that situation is say, well, if I can see that I have to do this. So, it becomes a, this for that deal, right? And this is, this is stated because it's deliberately going to be something they don't want to take an off the table. Right. So that they understand it in a more subtle manner that to get this over here, it's going to cost the vast over there. And they don't actually want that. So, they realize they reached the end of the road for cheapening the deal for them, right. In a polite way that you didn't say no again, pretty obvious, probably remarkably obvious, but one or two of you may find that helpful

When the deal is agreed. Even if it's verbally agreed. You've got it. Sorted. Do not go back and around with it again, another word. Sorry about that. Another one, you know, don't go back and try to squeeze more out of the deal. I was involved in a, in a startup company that was very successful in its space and public company approached us. The CEO. I was a major shareholder, was there from the beginning and I'm the CEO and the CEO of the acquiring company negotiated a deal that was very reasonable. And then the wheels were set in motion and we were heading towards the merger. And then the CEO, founder of our company went back and tried to retune the deal in a big way and the way in which he did it. And the scale of the ask just blew the whole thing apart.

So it never happened, right? He put himself in the place as being a jerk and flaky that the CEO of the acquiring company didn't want to deal with. It didn't want to have that guy in that role. It, it killed the whole deal, right? That's a good example of what you get. If you go back and reinvent the wheel after the fact you just bought in most, every case, you just got to kind of bite the bullet and say, hey, we negotiated it. It's not perfect, but we did this for good reason and okay, I could kill it. I could kill it dead, but if I'd rather have it. So, you know, in most cases goes, you know, continue down the path, okay,

I'm going to get into how to make the merger succeed. I'm not going to spend a huge amount of time on this. How are we doing on time? Are we doing well? Because you know, this is actually, I could write a book on this. Literally I could do two or three webinars on this, literally because the ease of financing or the ease of negotiating and closing a deal as little work involved. But the complexity of conducting successful mergers is very, very high. Now, in this case, though, if it's a SPAC, if it's a funded SPAC buying one company, your company, then the complexities are much reduced on that. It's seriously simpler because in most cases, the funding kind of comes to the funding SPAC. Isn't going to want to dismantle the company or peer off four fifths of it and throw them away or reinvent them and do them in a different way, six weeks from now, and cause the wall to die on the vine, which is the sort of thing that happens all too often in regular acquisitions.

But in the event that, that is the sort of thing which the acquiring is thinking. Yeah, well we only like this bit. We'll get rid of the rest. I kind of stuff. We'll reinvent the way they're doing it to make it much, much more profitable. You need to figure that out. And if you buy into it, then you are going to be involved in maximizing the efficiency of the combination. And especially if it's going to end up being three or four companies combined to make this whole thing, play can be a, an amazing, an amazing win. So that that's when this stuff comes into play. And as I said, in other situations, I would spend more time on it. In this case, I'll be relatively brief.

The acquiring company needs to respect the nuances of the culture and what makes the acquired company successful, whatever they may be. So, coming in and sort of steamrollering them because they don't make sense or they're illogical, or they look, they look in efficient is not the way to go. Cause that's, that's just the way to decimate morale and decimate the team where the good people put, right? So respect the nuances of it. And that really takes the local presence. It takes being there and listening, paying attention and being considerate and respectful and not moving too fast. Right? Because if you move too fast, generally you have though, you don't have sufficient knowledge of what gives you don't even know the business well enough as to what's really kicking, right? You got to be in it and you got to be speaking to customers. You've got to drill down in order to both add value and also know what you're actually dealing with because the external view is so distorted.

It's distorted, deliberately companies try to meet themselves that larger than life, every day, all of us do probably right. And that's how you get to where you're going. You have to have a future thought process of vision. And the more you can paint that picture and the more that others believe it, the better off you are, but getting into what actually works and demonstrating that to yourself so that you know what to adjust, you know, what to tweak. And then you also, you can spend the time figuring out how and when to make adjustments so that they stick and are successful. It's a lot of work and being attentive and paying close attention. Don't replace the old with the new, until you know that the new actually works. It's astounding and doing so many mergers that I was involved in where I'm running the merge or I'm running the business that's being acquired.

And somebody comes in from finance or operations and says, okay, Rod, we're going to be switching off this thing is replacing it with that thing next Thursday. All good. And I'll just ask a few questions. Well, how long have we been running them in parallel to demonstrate that the new system works well, we don't need you because we've done similar things before. So this is, this is just throw a switch and it'll work fine. So I'm a skeptical bastard when it comes to that, because I've had so many unpleasant and really more observed extreme cockups by companies where they didn't do it, right? Because they assume that your method would work right. A company that my first IPO, Ashton tape, soon after I, as I was leaving, they were negotiating an acquisition. And then afterwards, they purchased a company with one of the market, leading word processors, whose name would've come back to me in a minute, probably.

And they convinced themselves actually Ashton management. Couldn't convince themselves that they could do all the manufacturing, which was simple, making discs, making manuals, putting them together and shipping them that they could do that very quickly. So they closed down the warehouse with the acquired company and then the following four or so four or five months, they weren't able to fulfill any orders because there were as actually wasn't up to speed. Couldn't do it. And I had friends, actually my girlfriend at that day, he was working in one of the biggest software distributors, dealing with dealers and other large-scale dealers and entities that were trying to get their hands on this software and couldn't get it because numbers to be fine. Right. So, then what were they doing? They were building the market share of Microsoft word, which was a dog in those days was a really very poor piece of software.

The other leading software programs. And we're processing, we're benefiting by this extreme pocket, by an Ashton tape. Okay. The buying company minimizing top-down decisions is really key because it's so easy for a while intended decision made at the top. Well, hey guys, we need to shave 10%. And that sounds logical to me. Why would they do it a different way anyway? Okay. So, let's do that next, you know, by the end of the month, right? And now you've gone in, and somebody's, steamrollering things a department gets shut down. It's all done in a ham-fisted manner because it was done from above and nobody actually buys into it. And you know, you really killing the morale of the people, which is why businesses thrive, right? Building morale, getting genuinely high and keeping it, there is a serious challenge killing it. Is this something you do with the snap of a, of a top-down type decision made 3000 miles away?

I already covered that. And again, in this combination circumstance being a genuine, if you're not from inside, then become a genuine advocate of that entity and of its team. Show that by actions, because that is when you'll get started to get their support, you'll start to build your credibility. So, to give you an example, when Symantec acquired the Norton business we did a layoff of about 60% of the staff, but we had already planned it out ahead of time. And we had planned out who would be transitioning and what period of transition they would have, what bonuses they would have to get them to stay and so forth. And we have practice at doing this. So, we did a very careful job of merging the two companies with great success, because what happens in that is that everyone's morale is slammed by this terrible event of an acquisition.

And then they're looking for the second shoe to drop, right? That's one issue. You can cut the air with a knife. You can feel the electricity, making things happen in that context is very challenging. But over time by I was the local advocate, I was driving this company's growth within Symantec showing that I was driving for the success of our business for the success of our business unit. And when I made decisions, I, when I made selections and when I chose whatever I did, it was all based on building the success of our team and what we were doing collectively. It took a while to learn the grudging respect of the team teams, and also, you know, proving that there was never, there, wasn't an, there wasn't going to be a second shoe to drop, right. And then conservative budgeting. So, we were always ahead of expectations in terms of revenue or profit goals.

So we were always able to hire, hire more than the budget, that sort of thing, that kind of activity built morale. So, we had marvelous morale and we had good luck and we were doing something needed and the timing was right. You know, it was, it's never one thing, but even if you've got all the environmental components and the, and the strategic trends in your favor, you can still it up royally by being clumsy, right. Or hasty, you know, the best thing that I did and I did it with the other big acquisition at Symantec was core customers and find out what they loved and hated about us and what this latest update was doing and why it was great or why it was not. So, I actually had a fundamental understanding of our business. So, when I was in a discussion with the developers, all the product management team I wasn't I wasn't able to be misled if they would dry that, or if they were misleading themselves, I could see past it. Right. But that's obvious to do, but it does take time and effort. And, you know, it's invaluable stuff because now, you know, the business from the ground up, you know, really clued in and there's no substitute for that. And the time that it takes.

And the last point when you're doing this is to listen. And that, that applies to the entire journey. Doesn't it listening, paying attention that tack home where successful entrepreneurs, just because we are paying attention and adjusting course accordingly back sort of phenomenon. That's why you guys are here. You know, you're, you're, you're actively listening. Okay. That covers my prepared, prepared material. So I'm not going to look at the questions that are here in chat, and you're welcome to add more. And I will add, as I said, I will answer as many of these that I'm capable of answering and adding value to starting at the top. I will not answer our disclaimers. I'd like you to read them, answer them, posing a yes. Back rather than like, you know, what do that listing SPAC is easier and quicker really. That's the only Y so, you know, you have more control over it.

If you do a Regulation A+ IPO, or you do an S-1 IPO, you're your own master, you still have to get participants to play like underwriters or whomever. But the advantage of a funded SPAC is that if they like your company and you like them, and you can come to term, you can do the deal break quickly. That's what it's set up before. Right? So, it's, it's time of execution level. I would say, leveraging the heat in the market whilst it's there, because when you get markets like this, at some point, the show closes, right. At some point it's, it's not as hot waiting until the end of that period, inadvertently by perfecting your approach is often the wrong thing to do. And I've seen that many times, you know, companies ready to go to do their. This is really more of the era when I was seeing this.

And then the management decides, you know what, we've only got the two products. We're not quite there. Let's finish the third product, get it and show traction, and then go public because that's when we'll really know we're showing it right. You know, we got off, we got our act together, so they wait a year. And then the market closes. And six years later, when it reopens, they it's too late. You know, the company falling around, you know, falling apart as well. I mean, to say, not fooling around, be kind of weird for a company to fool around anyway. So often I've seen it where, where companies were poised to leverage the market heat of the moment and then perfected by over not analyzing or perfecting their preparations completely. Sometimes they come back later and it's fine. And sometimes they lose it along the way, because it's not possible to keep the team together.

Yada, yada, yada, you know, various things occur. And the number 400 or 440 funded SPACs oh, around 300 and 220 million is the, typically the average funding amount of a funded SPAC. Going public via a reverse merger would be other than a SPAC. Of course, yes. When a private company combines with a public shell, a company that doesn't have really, it's a private company, really buying a public company, hence the name reverse merger. Normally a merger is where a public rich successful company buys a dinky private company. That's normally the way an acquisition looks emerge, you know, M and a is normally that way because the mega bucks reside in the large public entity when it's essentially a past failed public entity, that is a shell of its former self, that it's still public and sort of flapping in the breeze, hanging around, waiting for an opportunity when that is bought, essentially bought by a private company.

It's a reverse merger. And of course, you can do that instead, a combination or a reverse merger where this back, which is still a reverse merger, technically, but it's with a company that has the money, is the public information available on facts. Yes. On Edgar, if you go look at the sec is adding your science and search through it. You'll find a, an abundance of publicly available information on every public company and SPAC on not exception. What's the size of distribution targets in particular, what is the smallest one can be in order to use a SPAC, you mean to raise for a SPAC? So, to my knowledge, there is no actual minimum. When you are doing your own SPAC via the current normal method via an S-1, what matters is, is there enough money to conduct it? Can you get the underwriters support to raise the money?

Do you have the team sufficient team on board to make the SPAC fundable? Those are the things. And if, if you can do that and you can convince the players involved that say 50 million or a hundred million is sufficient to do everything you planned to do, which makes it a really attractive deal. Then you can raise the money. You know, nobody's going to say, no, technically the sec doesn't do merit judgements on companies as to whether they're really going to be worth investing in. And they don't consider that their, their role, they consider making the rules and making sure people adhere to the rules. They're all I believe.

Yeah. The deadline for a SPAC to be invested, essentially, it's going to be particular to each one. There'll be a limited amount of time that you can stay out there raising money for the underwriters to stay on the case. You know, usually it happens very quickly. A regular IPO, the actual funding is two and a half weeks. You know, it is not a long time it's then if it didn't work in two and a half weeks, is he going to work at all? Because you're not normally going to find that it will work outside of the normal window of time.

Is it true that almost all SPAC sponsors have already a target company in mind? No, you're not allowed too actually. So, you know, companies SPAC's that pretend they don't have a target in mind, but go ahead and raise the money and then have that target in mind the whole time they are actively misleading. The sec, that is not what a SPAC is. So generally, that's a very bad idea because the SCC will figure it out and everyone will pay dearly for that. Right. So, no, they don't have a target in mind. Why is it most of the SPAC's haven't completed the business combination? I think it's because of two factors. One is that any individuals back, none of them knew how many other SPACs were raising money this week, this month. Right? So, their compared to the competition, their competitive landscape is unclear and also optimism because you've got to be optimistic to do it, to do anything in business.

If we all knew how hard it was going to be to do what we've been doing the last 5, 10, 15 years, probably most of us would have done something else. You have to be an optimist and then stick with it. Anyway. So, these guys are optimistic thinking while we bought what it takes, we know what we're doing. We raised the money. We can make some stupendous deals and we're going to make a lot of money out of it. Right. So, it's a good use of time and money, but that doesn't mean they're right. And then when you have a year and a half or two years with which to select one acquisition, you know, then it's going to take a while, right. It, isn't something you just rush into, especially when you have all that that time on your hands. So that's a part of it too.

Why the surgency during the pandemic. Yeah. I mean, I think what we experienced was that a big, a big acceleration and acceptance of online investing our business is all about helping companies raise money through online investing. And it's been a relatively, it's been a very slow market to grow, but it's accelerated beautifully because of COVID because you got all these people sitting at home bored. Many of them would money to invest many of them in institutions. And now we're seeing institutional engagement, the reggae pass on a regular basis, regular course offerings that wasn't happening before. So, it's a matter of entrapment, right? You know, track people with computers, accessing stuff online that they wouldn't normally do. And then realizing there's more to it than they thought. So online investing has caught on nicely. And to the extent they could do SPAC whilst they were doing it from home, same thing, because they can, and the market's so hot.

Why is the market so hot because of COVID right? The fed has been flooding the market with loans and equity purchases. So, you know, the market has been overly hot as a direct response caused by caused by the COVID and damage worked perfect. Now word perfect was another leading word processing company. They, they were based out of Utah, if you remember, and they, they benefit benefited beautifully from the cockup that Ashton tape made. I don't remember the history. I remember the CEO, the founder, he made the software at the request of a company that used Winewood processors because he liked their software, but couldn't get it on a PC. And he and he asked this consultant to do that. And the consultant said, yeah, I'll do it for this amount of money, but can I, can I go and sell it to other people?

And the guy, the buying company said yes. So, then he had a very well, I would probably sister that was remarkably similar to, to the the standalone work processes. And he did really well with it. And I still can't remember the name. If you create a back to raise 1 million to acquire XYZ company, but, but actually raised two, what can you do with the extra funds while you go to invest them or return them to the investors within that timeframe? Right. So essentially in the SPAC model, investors put up money, price is $10 a share typically, and then they stay at that price waiting for something good to happen. And if after typically a one and a half or two years, that's up to the SPAC team to decide, then if they haven't made use of the funds or haven't made an acquisition, they then get, have to refund the investors most of the money.

Okay. let's see, it says seven new questions. I was thinking there weren't anymore. My Google assistant on my phone is getting imaginative and thinking you can help me as you can make a webinar presentation, mate. Oh, I got to go to the right place at the questions here. So, I got what's the smallest company. It's a practical matter. What's the smallest company that can go public by a SPAC? You mean, I think what's a small is company that can be attractive for a SPAC to buy. It could be tiny in that it's two founders and an absolutely blockbuster technology, right? Because if it's the right technology with big enough potential, that's worth an arm and a leg, even if it's purchased for a low price, it can be worth an arm and a leg. Right. I am so privileged to be the CEO of Manhattan Street Capital because some of the companies approaching us are very early stage in time and numeric headcount, but they have blockbuster products and technologies.

It's just amazing. I mean, it's amazing the upside potential. If I had a fund, it's back, I would be buying these companies because the upside is a standing. I mean, you guys know what it's like, right? The more active you are in business, the more you see, and I'm privileged to see a lot of great companies, the ones that stand out by, you know, a head and shoulders will far, far more apparent. It's a glorious phenomenon, which I am extremely familiar for. So, it's not about size it's about, which is like, you know, funding a company in general, you know, will the VCs invest in a tiny company, started last Thursday? Well, yeah, if it's a blockbuster technology idea concept like pastors, they not, because that's just a bit too Lisa, but you get into just how to target the appropriate spot with specific business investment interests as a seller or merge partner.

So, I covered that earlier. It's hard because they generally don't disclose their targeting, but there are that there are those that do so combing through the listings on our platform, or going out on the web or subscribing to services that may require you to pay to look. Those are the ways to do it either legwork, right, or use a service like ours or a investment banking firm. But, you know, you know, that's where the fit would be. So, you know, probably you doing it is the best solution because you know where the fit could be great and valuations, it's all in the eye of the perceiver, you know, beholder and as well as in your mind too, because if they're offering you 150 mil valuations, but you are determined, you won't sell for evaluation less than 300, that's going to be a difficult negotiation. So, valuations are determined by the buyer on the market price. Today's market price is remarkably high because we're in the midst of a very hot market companies. Let's be Frank. I mean, there are companies on the NASDAQ and on all the markets, even on the OTC, QX and QB that don't have enough substance, but that have very high valuations because there'll be marketed very well, you know, in this market that doesn't persist in bad markets.

What's a typical percent of all the that the selling management team retain in a SPAC acquisition? Well, that is going to depend mostly on the strength of the team and how attractive it is to the acquisitor, to the acquirer to keep the team right. So, what you want to have, ideally in my view is you want a great company with a great team where you want the whole team to stay on board. And then market rates will determine, you know, what amount of equity is normal and appropriate will determine it. And what's already in place. We'll have a big role in that. It's a negotiation at the end of the day, they may find that they, they may conclude that they don't need a particular role or one particular executive or something, but in the main is going to be simple. If they, if the team is strong, they're going to want to keep the team on and motivated and there'll be big enough carrots to do so.

A factor for the buyer is these folks are making, megabucks suddenly, how do we get them to stay? Because now they, many of them will have exceeded their wildest dreams in terms of how much money they're worth. And maybe they're going to take a long, long, long vacation sabbatical, or just change to become a farmer or run a pub or something. So, they don't want to have that happen. They want to make it enticing to stick around and he gets banks to compete. Yeah. I mean, can I, I don't know. It depends on your company. So, if went to bat for you with our service and we're fortunate to get multiple facts involved, then inherently that can be a competitive environment might because you would be intact. It would be wise to let those buyers know that they are in a competitive situation.

And that generally works very well it's it has to be handled diplomatically. Of course. Can the SPAC invest in a portion of our company? Yeah, but they don't, they don't do it like that. If they don't get control, they're not going to like it on me. They need control. They're not their investors probably wouldn't support. When they go to make an investment, the SPAC’s go to their investors and ask them to participate. The money's there, but they aren't required to accept the acquisition. That's a part of the, the, you know, the lengthy documents that you see on SPAC’s. So, you know, if it's a minority position in the company that looks marginal on, you know, when judged as a whole to too few investors will take it anyway, right? But this, these banks aren't going to do that. It's just, it doesn't make any sense.

They're not going to get the obscene, the high valuation on a deal where they only have a minority position in a company with rare, rare exceptions in the last few conferences I've attended many seem to be bearish on the future of SPAC’s. What's my opinion? Well, it's, you know, it's, it's a, it's a phase. It's a phenomenon that we're going through and no, it will not be around in its current intensity 10 years from now five years from now because the environment will change. Right? So, two things, two things are shifting. One is the sec is making it harder to do SPAC's. Another is three things. Another is that there are more than enough of them out there right now. So, we don't need as many to go and get funded. And the third is that this hot pace in the market will not persist.

It cannot go on at this level forever. Right? It's going to either settle into a sideways phase where no one makes much money by investing in the market as a whole for a while, or it's going to do a crash thingy. And, you know, in either one of those spikes will not be happening anymore for a bit. Right. They'll probably, you know, then they'll recover at some point to to a normal level, but nothing like the level that we've seen recently. So yeah, it's easy to be bearish about the future of funded spikes, but that's not really the point to me if you're here because you want to get public quickly with your company and enjoy the process. I hope enjoy the process. Then, you know, now is great because there's so many funded SPACs out there to go to so great time. The market valuations are really high.

What you've got can be much more appreciated and you know, but again, this is such a qualitative thing because it changes your life, right? And it's not necessarily for sort all easy, you know, to be in a public company with deadlines and quarterly, quarterly PCA or B audits and reporting revenues and profit growth and having it and having good news and a solid stream of it. There's a lot of hurdles, a lot of hoops to jump through. It's not a no brainer from that point of view, not words, they were dead in the water a long time before. Actually, they were pretty much dead. They were pretty much dead in the water then, but I was when I left.

But thanks for the reminder. Yeah, WordStar was written by one guy, one program I wrote Woodstock, same as DBAs sacks in the earlier versions of DVDs. The easiest way to get public is via a spark acquisition. If you can find the partner, you know, it's like, what's the easiest way to get married, you know, find a woman you're compatible with and ask the question. But if she says, no, you can't find one. Then it's going to take a while. And then your own IPO or your reverse merger that you, that you draw five is under your control, right? You can make it happen. There's a lot of shell companies that are more expensive now because of the demand on for them caused by the market state and all the this bank deals. But nevertheless, it's a qualitative decision. The quickest and easiest way to go public is to be bought by a public company. Right now there's so many funded SPAC’s. That's probably the easiest target group. Hence this webinar, I have put together a short list of potential SPAC’s that might be interested in my company. Will you be able to make an introduction on our behalf?

So the answer is yes. If you, if you, if you approach me, we discuss it and I believe I can add value because I know the people, or I may have be able to add value in some other way. I'm happy to do that. And we would figure out we would end up charging a a commission on the transaction. If it takes place we're allowed to do that only is if we don't, if we, if we adhere to that, that is in the no actual letter from the sec, which there's a link to our matchmaker finder service. So yes, we can do that while not being a broker dealer. But this is a very narrow space within a non broker dealer, which is not a real word. I know. So if you approach approach me directly, I'll help if I can, but you know, if it's my English accent, you know, let's face it.

That's not going to work everywhere. And I don't think it's really that valuable anyway, and I've lost half of it. Right. But it's halfway across the Atlantic slowly migrating west way. Ratliff. Yeah. I still take that up. And what a great human being is there a discount page and a SPAC versus an IPO or direct listing? Yeah, I would say that your probably it's going to cost less to do a SPAC. You know, there's so many variables there, right? Because if you do a SPAC three months from now, because of efforts that you've initiated now, the likely it is pretty good that the market will still be strong. So the valuations can be there too. Like the are today. I'm not saying there will be, but that's a reasonable, you know, a year, two years is much less likely, but three months. Yeah.

But can you do an IPO in three months starting out? I know you can't. Can you do a direct listing in three months starting then? I know you can't. So if you need this hot market to do your IPO or direct listing, it's going to take Rama. Although you have control, it's more predictable, like finding the cute man or woman to get wed to unpredictable. At least that's my experience. I suppose it's predictable in some parts of the world where it's a range, isn't it. But then it's a different journey. Well, this recording of this webinar, yes, it will be available. We will send you an email, all those that confirmed, and those that attended will receive a link to the webinar with an index to it. So you can just watch the interesting bits and ignore me swearing because either we remove them or you don't have to look at them at all.

So if there are more questions, post them, please. Otherwise I'm going to wrap up shortly. It's 12:07. So I only booked the time, I think till 12. I'm not sure if I booked it to 1220 with your, with your intentions. Anyway, more questions. I'm happy to answer if I can, but probably I've come to the end of the set of questions. I hope this has been useful. Thanks again, to Ákos for making all the webinars happen and the recording and the blog posts and all of that, that he does as well. And to Bálint for all his work, in bringing the information in to make our matchmaker service have a critical mass of information in it. And for the information I presented earlier here, I thank you for attending. I hope this has been worthwhile for you because that's what it's about. You'd like to talk to you soon and, you know, just email me if I can be of assistance and look forward to potentially working with you in the future and if not good luck anyway. All right. Thank you very much, guys. Have a great afternoon.

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