How Do SPACs Compare to Direct Listings and IPOs?
In this episode of The SPAC Podcast, Patrick Sturgeon, Managing Partner at Brookline Capital Markets, explains why some companies may choose a SPAC over a traditional IPO or direct listing. While SPACs are not always the best option, Patrick highlights the unique flexibility they offer for certain situations.
He discusses how SPACs allow companies to phase in capital raising through mechanisms like PIPEs or private placements and to structure features such as earnouts more easily than in a traditional IPO. These tools can provide companies with additional structuring options as they transition from private to public.
Connect with the Guest:
Patrick Sturgeon – Managing Partner, Brookline Capital Markets
Website: https://brooklinecapmkts.com/
LinkedIn: https://www.linkedin.com/in/patrickasturgeon/
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Michael Blankenship LinkedIn: https://www.linkedin.com/in/mikeblankenship/
Joshua Wilson LinkedIn: https://www.linkedin.com/in/joshuabrucewilson/
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Disclaimer:
Michael J. Blankenship is a licensed attorney and is a partner at Winston & Strawn LLP. Joshua Wilson is a licensed Florida real estate broker and holds FINRA Series 79 and Series 63 licensure. The content of this podcast is intended for informational and educational purposes only and should not be interpreted as legal, financial, or compliance advice. The views and opinions expressed by the hosts and guests are their own and do not necessarily reflect the official policies or positions of any regulatory agency, law firm, employer, or organization.
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👉 Michael J. Blankenship - https://www.linkedin.com/in/mikeblankenship/
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Michael: You have an amazing background in the SPAC space. So when thinking about going public, why might a company choose a SPAC over a traditional IPO or a direct listing? Are there unique advantages for the SPAC route in your view?
Patrick Sturgeon: I think the point to highlight here is that a SPAC isn’t necessarily the best option for every private company. But in certain situations, it is a good alternative because it allows additional structuring options.
One of those is the ability to phase in capital raising, which you can’t do in a direct listing or traditional IPO. For example, we’ve had multiple de-SPACs where a private placement or PIPE came in concurrently at close. Some agreements only went into effect at close, bringing additional capital as the company became public.
That ability to use different structured finance vehicles around the transition from private to public is an advantage. SPACs also allow for other mechanisms, such as future liquidity for employees or investors. For example, building in an earnout is much easier to structure in a de-SPAC and more common than in a traditional IPO.
Patrick A. Sturgeon
Managing Partner
Patrick Sturgeon is a Managing Partner at Brookline Capital Markets, a division of Arcadia Securities, LLC, a Healthcare focused investment bank which provides capital raising, M&A, and strategic advisory services. He has completed a diverse series of transactions to include Initial Public Offerings, PIPEs, Follow-Ons, Private Placements from Series A through Private-to-Public Crossovers, Asset Back Lending, Buy & Sell-Side Merger Advisory, Secondary Trading and Strategic Advisory Services. He is asked to speak at events on topics to include the equity capital markets, the healthcare industry and transaction execution.
He has been the Chief Financial Officer of three biotech focused SPACs that have successfully closed acquisitions – Alpha Healthcare Acquisition Corp. (Humacyte (NASDAQ: HUMA) – first company to have RMAT designation), Alpha Healthcare Acquisition Corp. III (Carmell Corp. – Platelet-rich plasma (PRP) therapeutic focused on wound healing) and Brookline Capital Acquisition Corp I (Apexigen – Oncology focused). He continues to serve as Vice Chairman to the public company Longevity Health Holdings (NASDAQ: XAGE).
As a Founding Partner of Covenant Venture Capital, Mr. Sturgeon has led investments in prominent companies like Anduril, Anthropic, EpiBone, Dataminr, SpaceX and others, demonstrating his strategic investment acumen across high growth sectors such as artificial intelligence, biotech, data analytics and defense. He led the process to have Covenant confirmed as a Qualified Venture Fund for NJEDA which allows them to receive matching inve…
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