June 26, 2025
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.