SPAC Updates: What Changed, What’s Working, and What to Watch in 2026

Josh Wilson: Hey, good day everybody. Welcome back to the SPAC podcast and happy new Year, man, 2026. A lot of stuff happened in 25, which Mike and I are gonna kind of dig into, you know, some SPAC updates for you, some SPAC dates for spac. I don't know, I tried to think of something clever to say to that, but, you know, I wanna, I wanna dig into the, the first thing, kind of like on the docket today with, with Mike is, what is SPAC 2.0?

So Mike, happy New Year. Kick us off. What is SPAC 2.0? 

Mike Blankenship: Thanks Josh and happy New Year to all. So, you know, SPAC 2.0 is really an evolution and you know, I've heard sponsors talk about SPAC 3.0. You know, SPACs been around since, uh, the mid nineties, and so they've obviously evolved over time. But if you go back to kind of pre 20.

22 error before the SEC kind of came in and proposed and then later adopted in 2024, its own rules. Uh, we've seen a shift from the framing on the D SPACs. So earnouts, you know, performance based promotes, um, certainly a lot more sponsor forfeitures and that, and that means that. When the SPAC IPOs, you know, sponsors get a certain number of shares, uh, based on an amount that 25,000 usually, and, and they get these shares that they use, um, and they can forfeit or use 'em as almost a currency to get the deal done.

Um, we're certainly seeing longer lockups. Um, and, and you know, I think we're on the front end. On the IPO front. We're seeing, you know, underwriters, typically the upfront isn't the 2% that it used to be. It's become down. So we're seeing a lot in the backend, and then a lot of those backend fees that there's faith there that um, if the redemptions are high, then that backend fee could be lowered.

So we're seeing a lot more of that kind of tied back. So I think SPAC 2.0 is certainly here we we're, you know, this past week and the upcoming weeks, there's gonna be a number of SPACs that are, uh, gonna price and, and close on the IPO front and then. On the D spec side, we're certainly gonna see more as we're getting closer and closer to that, uh, inevitable financial sta in the state.

So it's, it's a good thing for the market. I think there's a lot more out there and I, I think there, it, it will be good kind of going forward. 

Josh Wilson: What do you think forced that evolution of SPACs? Right. So like there's some, like when I asked who ran the first spac, you know I have, I know two groups that would say we, we kind of ran those first SPACs and you know, that was in the nineties and now here we are, you know, in, well in 2020 there was this huge boom to 20, 20, 22 of SPACs.

But there was kind of like this forced like, um, flexibility when it comes to structure and fees. What do you think forced that? 

Mike Blankenship: I think it's a typical market supply and demand. I mean, you had a huge supply of SPACs out there and SPAC sponsors, uh, and you didn't have the targets that were sufficient to go public via a a, a SPAC route.

And so because of that high supply. Kind of changed the way the economics are done. And I think kind of going forward, we're now seeing a lot more repeat high quality sponsors and I think that's critical to the market and sort of, um, success because part of it was that a lot of these deals came out, had high redemptions and weren't very successful.

So, you know, the, it put a bad name on spac. So I think this helped kind of clean that up. 

Josh Wilson: Got it. What do you think's gonna happen? You know, so we're gonna, we're gonna live in SPAC 2.0 for a little bit, right? Mm-hmm. There's gonna be, um, do you think there's gonna be more because of these different, you know, fee structures?

Do you think it'll just, they'll just stay better priced after, like, how do you think SPAC 2.0 will affect before we get to SPAC 3.0? 

Mike Blankenship: Yeah, I mean, I think they're gonna. It will continue to be this way. Obviously anything where it's doing well, there's gonna be a rush to it. So, um, at some point probably going to be some oversupply.

Um, but I think it's gonna continue to, to evolve and the sponsor terms come in line because targets are, are gonna get smart about it. And come out and want to make sure, like they have a, a good SPAC sponsor team, one that's can help them either operate or one that helps them kind of understand it comes from that industry.

So I think it's important to, to, to keep that in mind as we kind of see, uh, 2.0 evolve over the coming year. 

Josh Wilson: When it comes to kind of setting up a spac, so let's just say you and I are talking one day and we're like, Mike, we should, we should really do a spac, right? So there's, there's that initial setup where, you know, it, it's, it's exciting, but there's some at risk capital that, you know, people put in.

Do you think that has become less, you know, do you think that that price tag has dropped a little bit for the, you know, the setup? Do you think it's more risky, less risky? What have you seen in the initial setup of it? 

Mike Blankenship: I think it's come down. I mean, you, you know, as I was mentioning earlier, the 2% underwriting fee at the IPOs.

You, you were seeing banks do it at 1% with, you know, a three and a half or four in the back end. Mm-hmm. Uh, deferred. So that caught the upfront costs come down. And then you've got DO insurance that's certainly come down as well. Um, you know, insurers want supply and if you didn't have as much the cost comes down.

So we've seen it where the high time is like a million dollars, just cover five years, uh, or, you know, very, or sorry, $5 million. Um. But now, you know, it's in the a hundred thousand dollars range. So it's certainly come down, uh, quite a bit. And so that makes it a little easier. I think we've seen, um, a lot of syndicated at risk, so people go out and they would syndicate the risk, um, the at risk capital that's gonna come, come in.

Um, and so you have those setups and then now we're gonna probably see some more public comp. Interestingly, public companies kind of form their own spac, uh, for deals, so that's another. Way that I think we're gonna see a few others, um, this year. So it's interesting time. That cost will certainly, uh, is an important piece on the upfront because it is a lot and that's really what the sponsor's paying.

But that, that has come down a little bit from, uh, from just a few years ago. 

Josh Wilson: Sure. Well, let's talk about this pubco, you know, forming their own SPACs. Like that's a interesting strategy I haven't heard about. Why don't you kind of un unpeel that one? 

Mike Blankenship: Yeah. We have one, and I won't name it, but we have one where it's, it's publicly filed, uh, but it's main sponsor is a public company and so it gives an optionality to the pub.

To go out and try to find targets and maybe use that spac, uh, indirectly as a, as a way to entice. And so obviously there's risk about who owns the public company and, and what they want, but you have, if they are a lead sponsor on one of these SPACs, and they, they get some return on that too. So, um, you know, ones that are out there looking to get deals done, uh, public companies, that is, then they could use this as another route.

Josh Wilson: Man, that's super interesting. What about the size of SPACs? You know, I think, I think when people were first starting, you know, they were, what was it, one 50 or 300, right? Like kind, those were like the, the not standards, but like the, I saw a lot of those. Where do, where do you see in, you know, SPACs at now in terms of initial setups?

Mike Blankenship: I don't think it's too far off from that. I mean, they were looking at maybe a hundred to one, you know, 200 in that range. Uh, because people have learned that sometimes it's, you know, if it's too big, it might be difficult to get the deal done because it's dilutive. Um, and then others realize that you're paying a lot kind of upfront, uh, for what may be difficult for you to, um, to, to execute and have how redemption.

So really putting that a hundred to 200 million range could be very helpful for, for a SPAC team. 

Josh Wilson: What, what do you, what's the smallest SPAC you've ever seen? I. 

Mike Blankenship: You know, before the, the exchanges, you know, put out rules, you would see 'em at 50 million. 

Josh Wilson: Mm-hmm. 

Mike Blankenship: Uh, but now they're in the, you know, 7 60, 70 5 million.

Josh Wilson: Okay. Got it. So when it comes to finding targets, you said if the price was too high, if it was a $300 million, it, it, it might be too difficult to find targets. So you had these SPACs that just kind of dissolved or, or what happens when the SPAC failed? 

Mike Blankenship: Yeah. They would liquidate or sell. 

Josh Wilson: Yep. 

Mike Blankenship: And we've seen a lot of that kind of go back and forth where they sell.

Josh Wilson: Okay. What, how do you sell a spac? What does that, how does that work? 

Mike Blankenship: You, you sell the sponsor, so like there's an l Ls E, um, you sell that sponsor to another sponsor group and they take over, usually with very little liabilities or come out, pay those liabilities. 

Josh Wilson: And the benefit of it is because you've already paid a lot of the upfront, could, could you restructure like how much it is or some of the deals in the backend?

Mike Blankenship: Yeah, you certainly could do that. Try to do that. Um, I, I, but usually they're just come in pretty clean, slate, wipe 'em out, you know, somebody else takes over. 

Josh Wilson: Okay. Do they, does it extend the window at which you can identify a target? So you still have that 

Mike Blankenship: same 

Josh Wilson: window? 

Mike Blankenship: That's right. So it's the, you know, the charter is what covers the window, so 

Josh Wilson: yeah, 

Mike Blankenship: whatever that time period is, is what it is.

Yeah. 

Josh Wilson: Okay. So the closer it gets to that timeframe. The, the better of a value could get it. So if you have a deal, a potential deal in hand that could, you know, you could, you might be able to, you know, acquire a SPAC and fit within that window. But if they have a long time horizon, that's the time value of money you've got it.

It's probably worth more, right? 

Mike Blankenship: That's right. Yeah. 

Josh Wilson: Okay. Oh, awesome, man. I could dig in a little bit. We've got a few other things on the docket to talk about. I could do. Yeah, let's do it. Okay. So let, let's dig into that a little bit of maybe for groups out there maybe. Buying a SPAC or selling a spac, like how would you even know if someone's willing to sell a SPAC or not?

Mike Blankenship: I think usually that comes from the investment bank 'cause they're gonna have the relationship and so they're gonna know whether SPAC is having difficulty finding the target or not finding the right target. 

Josh Wilson: Mm-hmm. 

Mike Blankenship: And don't wanna really deal with liquidation and have any more liabilities. So they'll end up, you know, telling.

A potential, um, buyer, Hey, we have this SPAC for sale. So that's usually what happens, 

Josh Wilson: right? So for, for that group, you know, they might've invested all the money to get it up and running. They've ran the press. They, they, they've done all the stuff, but they're coming up short, finding a target. Now, they might be another group out there who's better at finding targets who said, look, we'll take it over and we'll, we'll run and find the target.

So that, that's how it could be benefited, right? 

Mike Blankenship: Yeah, absolutely. And they, you know, sometimes a better place to do that. 

Josh Wilson: When it, when it comes to targets, right? So like if it's a hundred million dollars spac, right, right off the bat, like you're looking at companies valued at what, like an enterprise value or, you know, like market cap.

Like what are you, what are you even looking at for your initial target search? 

Mike Blankenship: Well, it has to at least be a minimum of 80% of the total trust. Right. So usually there's a multiple of that. 

Josh Wilson: Yeah. 

Mike Blankenship: Um, so it just depends on the transaction, the deal, and what they're willing to give. But yeah, it's usually a multiple of that.

Josh Wilson: So give, give me an idea. So a hundred million 

Mike Blankenship: back? Yeah. You have a $200 million pac? Yep. We recently did. Um, and went out and signed a deal for a $3 billion deal. 

Josh Wilson: Okay, got 

Mike Blankenship: it. Looking high school. So it just depends. Yeah. 

Josh Wilson: Yeah. So you're, you, you have to hunt in, you know, mid to upper market. You're not, you're not hunting, you know, rollup strategies for lower to middle market like that, that it doesn't even make sense to take a SPAC into that ecosystem.

Mike Blankenship: That's right. 

Josh Wilson: Okay. So you really gotta go upstream. Um, have you ever seen any strategies where maybe a SPAC will, will go after a, a group of companies or do any type of roll-up strategies for lower to middle market? 

Mike Blankenship: Yeah, we've, we've worked on a few of those. I, I don't think it's very effective because a lot of times the financials will get changed because if you have a probable deal, you have to have the proformas and the financials and it could be significant.

So it changes the financials, which usually anyone doing a SPAC that will, will know is that the longest, uh, thing that takes the longest time is the financial statement. So in, and there are all these periods of staleness in between, so it makes it difficult there as well. So I think we've got. Um, you know, you have to be careful with that and make sure you have the right team ready to, to go on that front.

Josh Wilson: So for the private companies out there who, who might, you know, be a good target. Right. And we, we, we have, you and I have conversations on, on the other side, on the d SPAC side of the, the, the path and the podcast for a, a company that might be a good target for that, right? You don't wanna raise your hand too, too soon because there's, there's things that you must do before.

You know, uh, having a conversation with the spac. So what should they do if they're like, you know what, we would be a really good target for spac, but how did, how did, how should they, you know, prepare for 

Mike Blankenship: that? I mean, my number one thing is if you want to do that, you are gonna have to get your financials in, uh, in order, because that thing that will take the longest, the PCOB.

Financial statements and if I'm a target, if I had my company, so if we had Josh Wilson and Mike blank of co right? We had our own company 

Josh Wilson: trademarked, 

Mike Blankenship: by the way. Yeah. Trademark. I would, I would go to you and I'd say, Hey Josh, we need to get those financial statements ready. If we're gonna go public via spac, we need to be ready.

Now if you're looking at doing a, a traditional IPO or a direct listing that the other ways to go public, you still need financials. So. So if you want to be public, I think the number one thing that is to be ready on the financials, tell 'em all the time and on the governance side of things, um, make sure you have that in order.

So all the, the right board ready to go. Because typically in a SPAC transaction, the SPAC will have a board seat, but you'll be the majority board. So you need to make sure you have the right people. It's, you know, the right people on the right bus, and so you gotta. Chart away there and, and, and make sure you have that kind of going forward.

So that's my advice typically to a, um, a, you know, company that wants to be public. That's a target, that's gonna be one for, for a spec look, it's a arduous process. It's one that takes time. And I think it's one that can be successful though, 

Josh Wilson: for sure. Now, the P-C-A-O-B hurdle, right? Like to go public. To be acquired by a SPAC to, to a direct listing.

You have to have your PCAO be audits. So it's, it's so amazing how many companies have been like, oh yeah, we're gonna go, IPO we're gonna do this. I go, do you have your audited financials? Well, I'm like, dude, you know how long it could take to, to get these audits done? It's, it's a, it's a thing. So I, I agree with you.

That commitment to go through that process, it's gonna clean up. You have to clean out your shoebox of receipts, and you gotta get things in order. But that's like the biggest hurdle that I've seen. What about you? 

Mike Blankenship: Massive hurdle. Because remember, you're putting these financials in there and then you've got an accountant that'll put 'em together, the statements, and then you have the auditor and that auditor will take weeks to get through reviewing, making sure all of it comports to what needs to be, what the line items.

And that it's all in line with what's required under the public company, uh, county oversight board. Um, and so, you know, making sure you have that is critical. And look, we've talked about before, it's about having the right advisors, and so making sure you get that early on as well. 

Josh Wilson: Yeah. Yeah. Listen, uncle Jimmy's been running your books for the last 60 years.

We get it. Thank you Uncle Jimmy. But like, if you're going to go P-C-A-O-B, having someone to do your pre-audit financials and prepare 'em will will make your P-C-A-O-B process. A thousand times easier, right? Um, 

Mike Blankenship: oh, a hundred percent. Because they're gonna be the ones that do it. I mean, look, you, you have to have as many the, it's a, it takes a village to get stuff done, uh, in the public company world.

And you need it because there's internal controls, there's disclosures. You have to have all that set and done. And yeah, uncle Jimmy's great. He's a good guy. Let him go barbecue with them. But I don't know that I'm gonna keep 'em up on my financials when I have all these investors and, and, and the, and a regulator that's looking out my financial statements.

Josh Wilson: Right. Give, give them a, give them a, uh, a cool golden watch and have them run your barbecue. But yeah, it's, it's time to get those financials in order, um, and. If people listen in to, you know, the SPAC podcast and to some of our past episode, there's some great conversations we've had with auditors and with with the CPAs who do the pre-audit work.

So, you know, I encourage people to go back to some of our past episodes. We have tons of shorts in their. Because we, we ran, when Mike and I started this, uh, Mike and I, that's a candy. But when Mike and I started this, uh, Mike and he started this podcast, you know, we started with our short strategy. 'cause we wanted to get definitions out.

We wanted to get the most frequently asked questions out. We've been, we've become the top show in SPACs and we've been asked to go deeper. We're getting hit up by investment banks and IR firms and PR firms and auditors, and all these groups are asking us to go deeper on these details. So that's why we're starting to do more longer form interviews.

You're going to hear these interviews, these longer form content pieces. Everywhere the audio hits Apple, iTunes, stitchers, all that. Fill in the blank, right? You're gonna see clips on YouTube. We're gonna try to keep our YouTube channel to clips, so if there's questions you have, you could go in there and type and find a clip that answers that specific question.

If you wanna dig deeper into the details, go to the audio piece right now. Let's dive back into the next thing on the docket. 2025 was a, a shit storm when it comes to what happened with like the, the government shutdowns and all, all of the, the freeze for the IPO and for the public markets. Like how did that affect the SPAC world and how, what could we do to maybe gear up for if that ever crazy stuff happens again?

What could we do? 

Mike Blankenship: Yeah, so it certainly affected because you had a lot of filings out there. Um, what happened was is the SEC's Edgar system, which is the public license system, stayed operational. So people were making filings, but there was no human being reviewing that. So no examiners. And so the SEC staff put out, um.

FAQs around it. So there were certain FAQs that said, Hey, you could go effective if remove the delay amendment. And people would do that. The problem was, is that NASDAQ and NYC uh, also put out FAQs and said, Hey, look, if you're not reviewed and no one signs off on this, we need certain assurances from your, your law firm as well as, um, as well as the auditor.

And so that made it a little bit more difficult Now. You know, if, if we were to get there making sure you have everything pre-filed, you would consider the 20 day, uh, rule, or 20 day automatic effective, because after that 20 days, you're effective. So if you're doing an IPO on that 20th day after that, you're public.

You're a reporting company, and so you have to really think about it. I think during that period there were over 900 registration statements filed, which put a huge backlog on the SEC staff, which we're seeing now. Uh, but it's starting to pick up. And so, you know, we're, you know, just we're seeing SPAC IPOs with no review letters, and so that's a big deal.

Uh, it means that they're gonna go out and hopefully the disclosure's really good. Uh, but you can go IPO as soon as you have, you know, do the public filing for 15 days. The bank's ready to go. You go out and price your IP 

Josh Wilson: man. 

Mike Blankenship: But yeah, I think you need to be ready if there's a shutdown anytime, just always be ready, 

Josh Wilson: always be.

I mean, that's the job of, uh, you know, the, the government, you talk about governance when it comes to the leadership, if, especially if you've been in the public arena for a little bit, to be ready for anything that could happen, including political or economic, right? So. Who should have seen that come in, right?

Is that the CEO? Is that, you know, a CFO? Is that an advisor? Like who should be paying attention to those kind of things or everyone? 

Mike Blankenship: Well, the number of calls I get Josh on, on government shutdowns and Mike ER's prediction. Um, it, it has been quite a few. Um, but I do think you need to just, you know, everybody be prepared and, yeah.

There isn't one person that's gonna know, the only people I know are in Congress and they're, whether they're gonna pass, get something to avoid that. So I think you just have to have everyone ready. 

Josh Wilson: Okay. Um, when it, when it comes to, um, you know, that that shutdown in, in that 20 day period, that 15 day period, like, do you think there was ever a scenario where, you know, a guy or gal wakes up, looks at his phone and goes, holy moly, we have a public company.

We didn't, you know, like, just based on the time and the date.

Mike Blankenship: Shit. I, I, excuse me. I, I would wonder if, if not, yeah. Uh, they got bigger problems if they don't even realize that. So I, you know, I'm sure there was some out there, but, 

Josh Wilson: uh, my head, as we're having these conversations, my head always runs to what's the craziest scenario that could happen because, you know, then we can, you know, at least 

Mike Blankenship: talk about it.

Well, I have a good story real quick. Okay. So it's not just a spac, but we had a company working on it. We're underwriter's counsel. They went out, believed that they could get the approval, uh, from the exchange, they went effective. And under the rule you have 15 days. There's a particular rule. You have 15 days to price and get the pricing information.

Um, and after that you have to do a post effective amendment and do all the pricing stuff. So it's a lot more complicated. But once you're effective, you can do that. Well, we had that situation happen. They never ended up pricing. So they were a public company, which meant. That there had to file the 10 Qs, 10 Ks, eight Ks, 

Josh Wilson: gosh, 

Mike Blankenship: and all that stuff with no listing.

And so you have to really make sure you can do that. So. 

Josh Wilson: Yeah, that could get expensive. If you're doing all that stuff and you're not trading on the public market and you're doing all these, your, your AK goes, well, we're a public company, but we're not trading. So, uh, that's your AK report today. Oh, man.

Mike Blankenship: Exactly right. Yeah, so it's a, it's an interesting, you know, you have to play it right. You have to make sure you're on it, and so it makes it a little more difficult to, to do so. 

Josh Wilson: Cool. All right, so let's dive into the next thing on the docket. Final thing on the docket today is, you know, let, let's talk about one or two, you know, new things in this back world that has popped up or, or maybe some big winners or, or things that have come up that caught your attention.

All right, let's take a look at the list and, you know, see if anyone pops, uh, pops in your, uh, your headlights that you, you wanna talk about. 

Mike Blankenship: Yeah, I mean, I think there's been quite a few kind of big ones that have been out there. Um, and we're starting to see bigger names come out. Um, in the last, you know, few months.

A lot of these, some of these have been announced that were, um, you know, traded above. So you, you know, you've got the Freedom event, which is the cancer detection, blood screening technology, uh, with Percept. Perceptive Capital Solutions Corp. Did a, you know, d SPAC with free, um, announcement. You got win vests, embed financial group.

That looks like a pretty good deal. Uh, Andretti, uh, acquisition with store dot, that was, that made big news. And so you got a few of these that are out there that are, I think are, are pretty good. Then, you know, some that are in the digital asset space that have been pretty active as well. 

Josh Wilson: Mike, why don't you kind of give us an overview of some of the SPACs that you saw in maybe some highlights there.

Mike Blankenship: Yeah, so if you go back about six months ago, uh, a lot of the digital asset stuff was pretty hot, and you still have some of that ongoing. So you've got, you know, 21 Capital Cantor Equity Partners was a big deal. Um, almost $4 billion worth, and it was a treasury backed. Um, and it really, really. Recently, uh, closed.

So it's ongoing as a pco. Um, there's another one that I think is pretty cool. It's autonomous electric freight, uh, trucks, uh, Eide, um, and Legato merger Corp. Three. That was a couple billion dollar. Deal. Um, you know, from the josh, from the hot sector areas. As you can imagine, there are a lot of different kind of sectors out there right now.

Um, and like the biggest ones we're seeing are all sort of quantum computing, nuclear, um, AI software, um, biotech, um. FinTech that kind of relates to a lot of that tokenization around the digital assets. We're starting to see some more of that and, and generally just di digital assets as well. So those are the hot areas which, you know, a lot of those are gonna be very capital intensive ones.

So it makes sense from a kind of go public that a lot of them may be. A little earlier than a traditional kinda long IPO, but ones that have found the SPAC route to be, uh, to be really good. And we've seen a lot of these, uh, or several of these trade up in the aftermarket, meaning that $10. Is really the kind of inflection point where you look at it and say, Hey, I'm not gonna have a lot of redemptions at the end of this deal.

And if it trades above that, why would anyone redeem if the stocks trades at 11? Well, you know, you wouldn't redeem for that $1. So I think a lot of, a lot of that's kind of positive as we're seeing the hot sectors. 

Josh Wilson: For sure. Now, for, for people who are listening in who might not understand redemption and pricing, so if it's at $10 versus $11 versus $9, talk to us about what redemptions might, or if it goes to $1, which we'd never wanna see right.

But kind of talk to us about like, what, what are redemptions and, you know, how does that play with the price of the, the spac? 

Mike Blankenship: Yeah. So as a spac, when you, when it goes out, it, it prices typically at $10, which is makes for use easy unit. Calculations. So units usually have a fraction of a warrant plus a a, a share or a, a right plus a share.

And so those are unit, they're unitized. Um, they go out at $10 typically. Now, when it was really busy and, and then it kind of got really, you know, supply is high. The, that price went up to 10 10 or 10 20, meaning they, the sponsor would have to overfund it. Now, where we sit today, uh. We're, it's still $10 Now when you get a a DPAC transaction, a business combination, you make that announcement.

Um, that's sort of the pivotal moment where you've lo you've told people what the value is of that company and where it's gonna be and how many shares. Right? And if Mark's excited about it, it will trade above that $10. And usually if it's above $10 50 cents, usually if you know that extra 50 cents helps because that kind of gives you a good marker of where potentially redemptions come in.

So if it's above that number, you typically wouldn't see any redemptions because a lot of. A lot of them bought in at 10, they're gonna be 10, and so they're gonna make a, at least a 50 cent profit on, on each unit that they owned, um, if it were to stay at that price. Now if it goes below, uh, a lot of times or stays around $10, which is pretty common, then there are indications that you're gonna have higher redemptions and you have to find ways.

To do an IR play, you know, an investor relation play where you're really telling the story. Um, because sometimes maybe it's a foot, you know, you know a fault that you overvalued the company. And so like people don't like it, market doesn't like it, so you have to. Be cognizant of that. And that's one way to look at it.

Another way to look at it is you have warrants looking at where those warrants trade, which is a little more complicated, but if those are trading low too, then you can expect a sort of higher redemption. 'cause there's not enough demand for those warrants. So, yeah, so it, it really depends. And I think that $10 marker is really important to kind of see, uh, where you're gonna be and, and what the redemptions are because it does help you from planning.

So you have the, the target. You have, you know, we're talking about $200 million back. That $200 million could go to the target once you, you depac. But you know, if you don't, if you have high redemptions, you're gonna get very little of that. Um, but if you don't, you're gonna have that capital. Now, a lot of times I.

Folks got there and raised what's called pipe capital. Um, it's private investment, public equity, so they're gonna raise that typically at the $10 price as well. Um, and sometimes there's a discount to that, which also tells you to the stock that there'll probably be a discount, but that pipe is also supposed to be some incremental capital for the transaction.

So companies in those hot sectors I mentioned, need a lot of capital. Um, if you're a. AI or data center, the amount of capital needed to do that and the computing and all of that, uh, is very, is very much something needed. So 

Josh Wilson: yeah, the energy infrastructure needed for a data center or for these quantum computing is like, it's ridiculous and it's very capital intensive, but you know, that's where the world's heading, right?

So it's like, who's gonna get there first is gonna, you know, manage the. The, the, the power manage it all. Um, I think for as much as I understand about quantum computing, 

Mike Blankenship: well it's, you know, that is something that needs a lot of capital. So it needs a lot of advisors. It needs a lot of, you know, if it goes public, could be in public, gives it another avenue to raise capital quickly.

And so. That's part of the theory behind it. 

Josh Wilson: Where are you, where are you seeing, uh, pipe capital come in? So we do a $200 million spac, right? We're rocking and rolling, and then we see some redemptions happen, right through no fault of our own. Let's just say we have great ir and we're, we're just going and we start seeing some redemptions pop through, let's just say $50 million worth of redemptions, right?

So now we're at one 50 when we expected 200, right? So we go after some pipes. Is that a good scenario? Like where do, where does that pipe money come from? 

Mike Blankenship: Fair question. But it's not at that point. So usually the pipe is raised, um, while you're looking to sign the BCA. Mm-hmm. Or the business combination agreement.

So when you announce the transaction, you announce that you've got the pipe money, plus you've doing this deal. So usually it's on early on, well before the redemption. So the way that Josh, way the word redemptions work is we. Get through the business combination agreement. We've got the registration statement on either form S four for domestic or form F four for a foreign private issuer, and we go through the rounds of comments, which by the way, the S sec C's been.

As I mentioned before, a little bit more lenient, so I think you've seen or at least less, uh, drilling into stuff. And so we've seen, uh, a little bit more receptivity to try to get deals done. And so you go through that process, the iterative process with the SEC doing amendments, you go effective, and then you hold your meeting 20 days later and before.

That meeting two days before is the redemption deadline. So the redemptions really kick off once that registration statement is effective. So you've got that period of time, and the way that redemptions typically happen is as it leads up, like anything in life, a lot of procrastination. So as it gets later and closer to that deadline, that's where you end up seeing redemptions.

If it's at a price, as I mentioned before, then you'll see more and um. 

Josh Wilson: But when that, when you're getting closer to that deadline, having, having pipe on standby, right. Like having people in relationships with people who do pipes, right? Like is that a, that's a good strategy in your, you know, going into these kind of deals.

Mike Blankenship: Well, a couple potential issues. One, you've already got an effective registration statement that didn't describe the pipe. Now you may have, you may have described that you'll have a potential pipe and that that's a little different. Um, but you gotta make sure you're prepared for that. Then two most pipe investors aren't, it's not that time period then that they're gonna look to, to do it.

It's really the valuation and getting it through now sitting this some certainty, the SEC cleared it and you're gonna do the meeting and hopefully close, may give some comfort to those pipe investors too. But we've seen it where after the meeting they go out and raise, you know, additional incremental capital.

Josh Wilson: Yeah, copy that. The, uh. It's fa it's fascinating and, and some of this stuff really is, is beyond my, my knowledge and I'm, I'm, I'm learning so much, you know, being a part of this show, and that's why I love doing this with you. Um, when, when it comes to, you know, the, the crypto things that we're seeing in, in the SPAC world, what are you seeing?

What, what kind of crypto companies or what kind of crypto plays are going because you're, you know, from my understanding, you, you do a lot of work, you know, with crypto companies and treasuries and stuff like that. So kind of give us an overview of that. 

Mike Blankenship: Yeah. Uh, you know, the Digital Asset Treasuries was a really hot play back in summer of 25.

And, um, what it would be is Microcaps would come in and, um. You know, they would create a subsidiary and then that would hold the digital assets and that would grow off, off that you also, at the same time had SPACs, which were vehicles similar to a microcap that would just hold, um, you know, would get a pipe or, or some sort of investment of a cryptocurrency, whether it be Bitcoin, Ethereum, Solana.

Any of those would go out there and then create that potential Digital asset Treasury, uh, as part of the spac. So going and merging with the company that had it, um, we've seen those close. They're, they're certainly moving through, which is a lot different than the previous SEC and the previous administration, which, you know, this current SEC administration views most of the digital assets as an asset as opposed to security.

Uh, which is a big implication because that therefore, you know. Holding these aren't, doesn't make you an investment company, which helps from the analysis of not having to register and 

Josh Wilson: mm-hmm. 

Mike Blankenship: Be even more regulated. So that's why it's a little easier on that front so that SPACs became a vehicle because the, you know, the sort of blank check company that they are, or shell type company, uh, could hold them that asset.

Josh Wilson: Yeah. Very cool. So, you know, um. Don't you sit on a crypto advisory committee or like, or, or is it the AI committee? Like which one are you a part of? 

Mike Blankenship: Yeah, some of the ai, um, okay. Which, you know, doing a lot of that, you know, internally we use a lot of ai, uh, for our transactions and stuff, but, you know, have a lot of knowledge around that.

Whether there be from quicker, faster, smarter transactions to, to doing that. Now I think AI companies, there are a lot of them because, uh, Josh, have you ever. Try to work on one of these. And if you had an LOM um, you know, program, you, you pay the enterprise, you could do a backend application. I mean, we could probably do one in a couple days.

It become so, uh. Pretty easy to do. And so a lot of AI companies have popped up, like lots of them. I mean, I work in the Bay Area quite a bit and see all of it, but I think some of 'em are, are really good companies and maybe, you know, you would have that roll up into a spac. Uh, a lot of these, because of the kind of earlier nature could be there.

I mean, some of 'em have good A A RR, the recurring revenue from. You know, contracts and getting it done with enterprise and a B2B solution. 

Josh Wilson: Mm-hmm. 

Mike Blankenship: Um, those make for pretty good. Spac potential SPAC plays too, because of the growth nature. People like the SPAC model because it does have that growth nature to it.

And, um, I think these are, these are ones that certainly could do that. And I think it's, it's interesting time now on the crypto side. I, I personally love crypto. I think it's a good area. I think that you're gonna see a lot more of that and more, more tokenization and a lot more interest around that. So I.

I like it. I think it's a good, I've personally been in, in it since, uh, 2015 really? Um, so yeah. 

Josh Wilson: What was your lowest buy point in crypto? 

Mike Blankenship: Uh, the Bitcoin was sub, it was at least sub, uh, 5,000. 

Josh Wilson: Wow. 

Mike Blankenship: Yeah, Ethereum was pretty low too. Um, maybe a couple hundred, but yeah, it's. It was, you know, early on and it wasn't, and people say it's speculative, but I always thought that there was use case for a lot of it, you know, Bitcoin, you probably heard this, but the, the metaphor people always use is Bitcoin is, is gold and, and Ethereum is oil.

Mm-hmm. Meaning there's actual a lot of use cases around the, the Ethereum and, and there are, we're seeing a lot of it. And. I think we will. It's, it's, uh, one of the kind of safer side, but that's why we're seeing a lot on the SPAC side that have been Ethereum based. 

Josh Wilson: Man. Yeah. Super cool. Um, as we kind of wrap out today, what could people expect when it comes to, um, you know, maybe 2026 and SPACs and maybe even cast some vision on what you would like to accomplish with the, you know, the SPAC podcast and future conferences and, you know, us showing up at these places.

Like cast some vision of what you, what you would like to see and what would you like to see from the audience perspective too? 

Mike Blankenship: I think from an audience perspective, just, you know, inquisitive folks ready to understand and maybe there are enough that don't know much about SPACs and I think this is an education that we're trying to do here.

I think we're having a little fun here, Josh, but, and that's what I want, but as much fun as you can have around SPACs. Um, so, you know, I think. Seeing that and educating and getting an engagement there is, is pretty critical. Look, a lot of people in the market don't understand it. A lot of financial products are very complicated and, and ones that people don't understand it, so they don't want to get into it.

It's like talking about digital assets. A lot of people don't wanna get into that because they don't understand it. 

Josh Wilson: Right. 

Mike Blankenship: And so if we, if, if you and me can do just a little bit of educating, I think can go a long way. If we can get one person to understand and go, maybe go do a deal because they understood more from us, um, and got it free.

'cause we talked to each other and talked to other guests. I think that go go a long way. I think it's, you know, as I've told multiple people, keep that growth mindset and always trying to grow. And I think there's a lot out there. Um, and there are a lot of businesses out there that are, are, are, are really good.

Uh, I think they're, you know, good for. The world. And I think being able to help kind of manage and, and learn and help them, uh, would be very important to me. 

Josh Wilson: Cool man. Well, fellow deal makers in the audience has always, uh, you know, reach out to us. The, the spac podcast.com is a good place to, you know, connect with us.

You could ask questions, uh, or you might have some suggestions about show topics that we could dive deeper into this. Now, if you are in the SPAC ecosystem, you're an, you're an auditor, you're a deal maker, you're an investor, and you'd like to kind of share your perspective, head over to the spac podcast.com.

Up at top, there's a quick. You know, contact form, fill it out and we'll get you scheduled for a next episode of the SPAC podcast. So then we'll see you guys. Cheers.