How He Evaluates and Structures SPAC Deals
Chris Sorrells explains his disciplined approach to evaluating and structuring SPAC transactions. From prioritizing unique assets to ensuring two years of cash at close, Chris outlines what separates lasting companies from overhyped deals.
Guest: Chris Sorrells – Chairman and CEO of Spring Valley
Connect with Chris: https://www.linkedin.com/in/chris-sorrells-5a6a836/
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👉 Michael J. Blankenship - https://www.linkedin.com/in/mikeblankenship/
👉 Joshua Bruce Wilson - https://www.linkedin.com/in/joshuabrucewilson/
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Disclaimer: Michael J. Blankenship is a licensed attorney and partner at Winston Taylor. Joshua Wilson is a licensed Florida real estate broker and holds FINRA Series 79 and Series 63 licensure. The content of this podcast is for informational and educational purposes only and should not be considered legal, financial, or compliance advice. All views and opinions expressed by the hosts and guests are their own and do not necessarily reflect the policies or positions of any regulatory agency, law firm, organization, or employer. Listeners should consult their own legal counsel, compliance teams, or financial advisors to ensure adherence to applicable regulations, including SEC, FINRA, and other industry-specific requirements. This podcast does not constitute a solicitation or recommendation for any financial products or services.
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Mike Blankenship: So Chris, you've now taken multiple companies public through Spring Valley across some various different market conditions. We've seen ups and downs.
How has your approach to evaluating and structuring deals changed since your very first spac?
Chris Sorrells: Not a lot. Our focus has always been on trying to bring unique assets into the public markets. Ideally, first movers. Or a quick second deals in which they're 10 or 20 or 30 publicly traded companies aren't really a focus for us.
We, we really pride ourselves on uniqueness and we've been able to do that in our first two deals. In addition, we are very, focused on properly funding these companies two years plus a cash at close guaranteed. One of the flaws we see within the SPAC market is undercapitalization. I think that has led to underperformance.
So we're laser focused on that. Very focused on fair value. I think that's another thing that has harmed the SPAC market. Overvaluation sponsors not, getting that component correct in the front side. Very focused on having good advisors, lawyers, accountants lots of deals get hung up.
People that are not in the product day to day. It's a complex product. And so having subject matter experts seem to enable smoother execution. And we've had that in both of our first two deals. We filed, or S four within three weeks from announcement. Certainly look for, strong characteristics within the companies, the IP barriers, the moat, so to speak.
Very focused on competent teams. Teams that are not only competent and skilled, but teams that know how to make money and teams that know how to take advice. So those are things that have always been core to us. I think in the first wave, in the 2020 timeframe, you might have been able to count on a brief moment some of the trust.
I think as we've evolved, you have to be very careful about counting on trust to fund company. Post-close redemptions are still relatively high. There's still a lot of volatility in and around the redemption number, so we're very focused on either having cash on hand and or pipe to backstop, redemptions, and then the redemptions if they're low and we've had low redemptions in both of our first two deals that's just icing on the cake.