The Sponsor Promote: Perk or Problem?

Let’s talk about the SPAC ‘promote.’

Sponsors typically receive 20% of the company’s post-IPO equity.

That’s the reward — or the ‘promote’ — for building the deal.

But here’s the controversy: if the deal underperforms, the sponsor might still win.

That’s why more deals now tie the promote to real results — like stock performance, revenue milestones, or investor approval.

When the promote aligns with performance, everyone wins.

Talking Points:

• “Promote” = typically 20% of post-IPO equity given to sponsor.
• Intended as reward for risk-taking and leadership.
• Can misalign incentives if sponsor profits regardless of deal quality.
• Recent trends: performance-based vesting, clawbacks, earn-outs.
• SEC scrutiny has increased around transparency of promote terms.