After 130 SPACs and 140 DESPACs Here's What I've Learned with Brandon Sun

This is Mike with the SPAC podcast. Today I'm joined by my friend Brandon Sun. Brandon, um, why don't you give us a little bit about yourself.

Mike, thank you so much for the opportunity. I'm thrilled to be here. Um, I am a SPAC practitioner, been doing SPACs for about 13 years, uh, three and a half years here at Cohen Company, and prior to this, a decade at Deutsche Bank. Um, in my career I've done about 130 SPAC IPOs for Premier Blue chip sponsors, uh, globally. But more importantly, I think, uh, where I really differentiate is I've done 140 DESPACS, uh, which is the most of any banker on Earth Done deals in pretty much every sector, every geography. Um, and I do need to preface that everything I say here is just my. Own personal opinions and does not constitute investment advice.

Absolutely. Well, that, that is one very impressive, uh, history you have with SPACs and certainly the right person to have on. So, you know, I think, um, you know, as, as we'll be discussing, um, SPACs today, you know, it's gone through a full evolution cycle as we know over the last few years we've seen this from before. The SEC rules adopt proposed, adopted, and now we're in something else. Where do you see the net? Where do you see the real advantage today compared to traditional IPOs or, or direct listings?

Uh, at the end of the day, I think with SPACs offer, right, is it offers certainty if a company wants to go public, right? Uh, the SPAC give 'em the surest way of ascertaining a NASDAQ or NYSE listing, right? Or target. It can control speed, um, and it can control certain things such as the way the valuation and deal structured. The problem with the IPO market is even though it's the most conventional path to going public, right, uh, unfortunately your fate is sometimes, uh, in the hands of few investment banks, right? And you catch a bad market window, you're simply not able to go public. If you look at this window now, it's actually really interesting, right? There's a thousand companies win to go public, right? Publicly file S ones or confidentially file S ones, right? They're all effectively stuck, right? The IPO market right now is a little bit of a disarray, right? So if a company really needs to go public, take control of their own destiny, right? The SPAC is the best way to do it and the quickest way to do it.

And so you, you mentioned it's an interesting time right now and, and I'd love to get your take on this. So what micro macro, you know, from a macroeconomic, uh, viewpoint, trends in a regulatory investor, appetite, retail participation? We hear a lot about, you know, our shaping the SPAC market today.

I think the market, it's at an interesting time, right? There's about 200 SPACs out there, 200 publicly traded vehicles actively looking for targets, right? So a lot of potential vehicles and partners, right? Um, I think on other side too, like some of these companies are going public, right? In catching immense. Uh, interest in the public markets post-close right Demand, not just from institutional investors, right, but from strategics and retail investors, right? Sometimes even government entities, right? So I do think it's a really interesting time. There's a couple sectors, right in particular's getting disrupted, uh, such as the rare earth critical material space, such as the quantum computing space, right? Such as the SMR nuclear space. So I think in some of those sectors, you're benefiting from this massive public private arbitrage, right? You go to public multiples, right, are so much higher than that at private markets and there's so much more demand, right? By being public than saying private. So in some of those instances, right, companies almost have to export, be public, 'cause it is the lowest cost of capital and it's the most access to capital.

So you mentioned the hottest sectors and you, you mentioned, um, you know, quantum computing. What, what do you think makes that sector so hot right now, particularly if, you know, looking at SPACs, I mean, you know, we know each other working on quantum deals, but in your view, Brandon, like how do you see that kind of going forward, especially with AI and everything else on the quantum and, and digital assets, everything.

No, it's a, it's a unique moment in time, I think for the quantum computing space. Right? People realize like it's a disruptive technology that could change the world one day. It could be five years, could be 10 years, could be 20 years, right? But it's a matter of when and not if. And I think what's really, really interesting is all these companies have gone public, uh, and every single one has gone public through apac. And they've done pretty well. If you look at the three peers, right? IonQ, Rigetti, D-Wave, they all trade meaningfully above 10, right? IonQ trades at north of 10 billion. Our market cap Rigetti and D-Wave trade north of 5 billion, right? We're working on a couple deals together, right? Xanadu, right? Which is an incredible outcome, right? They raised 275 er, common equity pipe by 10 bucks, uh, supported by the Canadian government, right? And obviously Terra, which announced. Two days ago. I think showing the world that the door's open, there's investor demand for these stories, right? I think that's pretty empowering. I think every single quantum computing company, CEO management team is looking at this as a potential option.

Yeah. And, and those deals, a few of'em you mentioned have cross border, uh, aspects to them. So how do you see, you know, cross border dynamics evolving in the SPAC space? I mean, are SPACs. You know, still a compelling route for those international companies coming into the United States listing here?

Yeah, no, it's a really good question. Um, I think if you look at kind of, uh, the capital markets globally, right? Liquidity and volumes are drying up in a lot of foreign exchanges, right? Uh, the A SX in Australia, the TSX of Canada, and I'm from Canada by the way. Um, a lot of these European changes, some of the Asian exchanges right outside are really India, the Middle East, right? Every single exchange out there is struggling, so more than ever, right? Companies globally are trying to list. In the US we're trying to list on know Nasdaq, we an NYSE, right? This is the deepest pool of capital. This is where multiples are highest, right? This is where there's most of the demand, and this is oftentimes where constrain. So I think because of that, um, SPACs have become so powerful if you have a company that really wants to ascertain confidence in going public, right? The SPAC gives 'em that kind of certainty because. The problem is for US investment banks, right? Anything with a little bit of hair, right? They toss out, right? They delay. So if a company wants to go public today, uh, and it's foreign, um, the SPAC offers that kind of, uh, path.

And if you're advising or at least talking to, to tar, if you're helping on the, the sell side, the target side, what are some of the things that you'd tell them to kind of be ready for the SPAC deal? Like how, like would there be something you would tell 'em, like, these are the top three things you need to worry about? Not holding you to three, but just

Yeah. I mean really the thing I look towards right is a deep and laser focus from the the target management where CEO or founder on wanting to be public, right? That's by far the most important thing, just because. The process of going public, whether it's a SPAC or an IPO or reverse merger or direct list, right? It's long and arduous and there's obstacles that come up, right? The companies that wanna go public, because raising capital is number one focus because they're running outta money, right? Those inevitably sometimes run into trouble. Because if you want the capital market environment right, where it's less than ideal, they sometimes make ex make excuses and walk away, right? Whereas the ones right, whose number one priority is to go public, they'll get it done and no matter good times or bad, right? They're gonna find the right motivation to close these deals. Even if it's suboptimal. That's what I really look for in a, in a, in a company. Um, other things to really watch out for right, is really embracing right, the role of being public, right after going public, making sure you're generating, uh, eyeballs from, uh, investors, right? Make sure you're capturing imagination and getting out in front of media. Three is honestly, look, just a lot of hard work, right? Pounding a payment, having a lot of investor meetings is possible, right? For average dpac, we're doing, we're setting up dozens on dozens of meetings for management teams, right? Even if they don't invest today throughout the DPAC process, they could be a buyer post close, right? They could follow the story for months and quarters to come and support the company in the future.

And let's talk about the flip side of that. So the, the, the, the buy side, the sponsors, what do you tell them when they're looking at targets as sort of, this is, is it sort of similar but on the other side, like these, you need a management team that's hyper-focused on this and that could achieve its goals. What, what are the kind of top things you're telling the fact sponsor?

And, and kind of the flip side, it's really the same actionability, right? Time is my biggest opportunity. Cost as a banker, right? Time is the biggest opportunity cost for a lot of these SPAC sponsors, right?'cause there's only so many hours in the day and they only have typically two years, right? Focusing on a target who wants to be public is by far the most important thing. Right? And making sure those dynamics are there. Sometimes it's a di disparate shareholder base who really need liquidity sometime because maybe the sector is getting disruptive and the concert level public, right? Look, sometimes it's simply. Twinkle eyes of the founder, right? Making sure the company actually wants to go public. Um, that is vital because if there's no actionability, right, a lot, lot, it could be a lot of wasted time and effort. Um, obviously look, a couple other things, obviously you need to check out, right? You need to make sure the deal's correctly valued, right? Correctly structured, uh, to succeed, right? We wanna make sure the story is compelling enough to resonate so we can go raise the capital.

Okay. I couldn't agree more. That story, like the ultimate and pegging that right valuation and getting it right is, uh, very critical. So where do you see the rest of the year as far as, you know, you mentioned 200 searching and hopefully a lot more. We hear for sign up and you know, d SPACs close as well. What do you see for the rest of the year?

Um, I think it's gonna be a pretty exciting year, honestly. So just this week we've actually announced Two DESPACS, right? We worked together on Terra Quantum, right? We worked together, uh, sorry. And there's another deal. We're advising, uh, USL rental. It's a big lithium play, right? So we're sell side advisors to both. It's really exciting. Next week we're actually gonna be announcing two other deals, right? One's a really interesting space and Sally deal. Another one's a defense type play. Um, in the weeks to come, there's a couple announcements we have as well. Right. So I think in some ways, right, I think it's gonna be a really, really, really active take. Right. Um, so I think it bodes really well for SPACs.

That's great. I'm excited for, uh, good year. We certainly need it, the capital markets and seen some recent volatility, but that's good. Well, I, I don't know if there's any kind of final word you want to give to maybe the SPAC sponsors or, or targets, but, um, it's been certainly great speaking with the brand.

No, thank you. Uh, I really appreciate time, Michael. Um, again, I think I just need to stress that this is for information purposes. It only represents my, only my, my opinions. Um. But I do think SPACs are a powerful capital solution to this market. Right. Um, I do think it's a really interesting time or it's gonna create a lot of deal flow and opportunities for companies that wanna be public. So, um, yeah, if anyone has any questions, I'm always happy to be a resource, happy to explore.

Great. Well, I can attest to that, that you're are quite the, uh. Expert and, uh, uh, quite a great gentleman to, uh, to help out. So, um, thanks again, Brandon. This is Mike with the SPAC podcast.