The Four Ways to Go Public, and Why Most Companies Only Have One — Brandon Sun

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What's going on everybody? It's Chaz, your host of The DESPAC Podcast. This is gonna be a good one. We're talking to the Brandon Sun from Cohen Capital. Um, here's what you gotta know. If you wanna talk to the guy who's done more DESPACs over the past year than probably anybody else in capital markets, this is the episode you wanna get fired up about listening into. Do not miss what Brandon is gonna have to say. Hang on every word, because if you love check writers, this is the guy that brings the recipe. So Brandon, I'm fired up to have you on the show today. How's it going? Yeah, I'm doing good. I- by the way, everybody, I forgot, it's a banker, FINRA. We've gotta make sure that we deal with FINRA compliance. Brandon, you got a disclaimer for me? Yeah. No, I just wanna preface this and say, look, these are merely my own views. They don't represent any investment advice. But however, I'm super excited about the opportunity. I'm thrilled to be on this podcast, and thank you so much for your podium. Man, I'm fired up to have you on here. Thanks so much. Why don't you tell everybody a little bit about you and about Cohen? Yeah, no, I'd be thrilled to. So my background is I'm a SPAC banker, uh, by specialty, right? I've been doing this for about 14 years. Four years here at Cohen & Company, prior to this, 10 years at Deutsche Bank. In my career, done probably about 140 SPAC IPOs for blue chip issuers, but more importantly, I've done about 145 De-SPACs, SPAC M&A deals, than most of any banker on earth. Done deals in pretty much every sector, every geography. Uh, Cohen & Company, we're a boutique investment bank. We're about five years old, but the SPAC product is core to what we do. Uh, we are number one in terms of SPAC IPOs. We actually just raised another SPAC IPO today. Two other ones just this week. Congratulations. No, thank you. And we're f- focused on De-SPACs. Every single year, this year, last year, the last couple of years, we're number one in De-SPACs. This is what our firm is focused on, helping great private company go public. Dude, I love that. Okay, so I'm gonna reiterate. If you are a private company looking to go public and considering a SPAC vehicle, Brandon Sun, this is a must-listen-to episode. So Brandon, let's go ahead and dive in real quick. Let's talk about why go public through a SPAC instead of just doing a traditional IPO No, it's a good question. Like, it's core to every kinda target, right? Going public is the most important event in your corporate life cycle, and you have to do it properly, and you have to do it to maximize fanfare and success, right? There's actually four ways to go public. You could do an IPO, you could do a de-SPAC, you could do a reverse merger, you could do a direct listing, right? Um, I would say, like, a lotta companies, if they had their choice and druthers, they would choose a regular IPO, right? However, that's a luxury that's not available to 95% of companies out there, right? I think the biggest challenge for regular IPO is, like, there's so many externalities at play, right? You need investment banks that are wanting to take you public at the right time, right? Uh, you need a market that's supportive. So I think what a lotta companies realize, look, if they wanna take control of their own financial destiny, right, the de-SPAC is the best way to do it, right? There's over 250 publicly traded SPACs out there who are amazing partners who could provide validation, support, and advice. And they realize by going public through a SPAC instead is they get to guarantee an- an NYSE or NASDAQ or Texas exchange listing, right? You get to control speed and valuation, and I think in some ways that's so powerful because if you wanna go public and you wanna take advantage of that public-private arbitrage, right, control and speed is critical, right? Um, there's a reason right now there's 1,000 companies, right, that are trying to go public. Publicly filed S1s and confidentially filed S1s, right? Many of these companies have been waiting for quarters, sometimes years, right? They can't do it, right? Because the IPO backlog is massive, because investment banks are wanting to move quick enough, right? That's why the SPAC path is oftentimes the best for a lot of these private companies Man, I love that you said that. I particularly love the way you framed it, guaranteed. There's just the, there's just so many things in business that aren't guaranteed and, like, when you can have something that's locked in, then, like, it- it's one less thing you have to worry about in the ocean of crap that can go sideways, things that, promises that can be broken, everything like that. So I really like how you framed that. That's a, I think that that's a huge value proposition that can't be overstated. So, uh, let's talk about, like, what sectors you're seeing the most activity in from, like, not only from SPAC sponsors, um, as well as, like, the investors. Where are you seeing just a lot of the activity? Is it, uh, is it quantum, robotics? Um, what- what's hot right now? Yeah. There's a couple themes, right? That are really resonating with, uh, the public market investors, right? Um, quantum computing is one, right? Another sector that's incredibly hot is nuclear or fusion, right? Yeah. SMR companies, they've all really kind of gone public through SPACs mostly, right? Um, critical materials and rare earth, uh, that's also a really, really attractive sector. Defense tech is really, really interesting. We're doing a lot of space and satellite deals as well, right? I think one commonality through a lot of these kind of sectors, right, is you have this big public-private arbitrage, right? Where simply by being public, you get a much higher valuation, you get many more sources of demand, right? Um, and I think that's what's attracting a lot of these companies, right? Because simply by being public, I don't just capture institutional bid, right? I'm getting a strategic bid from maybe some companies or maybe even the US government. But more importantly, look, the, the retail bid, right? Which is massive. A lot of these stories that have a America first undertone, right? You're getting a lot of kind of, uh, the average American investors supporting these companies in the public markets, right? Um- Yeah… whether it's rare earth companies or These kind of capture the public's imagination. They drive eyeballs. Uh, and simply by being public, there's so much volume, so much demand. Uh, so actually, I think it's a super incredible time to be a public company. So let me… 'Cause you mentioned really what the investors, both institutional and retail, are really fired up about. Are you noticing that the SPAC sponsors are in alignment with that? Or do you see that SPAC sponsors tend to be kind of chasing Moby Dick? You know, like the, like this white whale that's maybe, uh, not in line with the investors. I don't know. Yeah, sp- SPAC sponsor is a good sponsor, right? You kind of gravitate towards sectors where there's actionable deal. Um- Yeah … support sponsors will follow where the investor demand is, right? Just because it's not just ease a deal, right? Being able to raise pipe capital or trust capital, right? It's even post-close. These stories that resonate with the public markets, right, they're gonna do better. They're gonna trade better post-close, right? Yeah. They're gonna be able to better survive and accelerate their trajectories. So, uh, the, the average SPAC sponsor's well-tuned to that, right? And they realize, look, the, the, the whole benefit is of a, of a SPAC is to take advantage of that public-private arbitrage, right? Um, you wanna go after sectors that are exciting and high growth, and public markets will reward you for that, right? Um, and they understand, look, sometimes, like, if it's a cash-run business but it's not as exciting and it's not growing right, look, the private market's probably a better f- fit, right? Just because the private market, with the use of debt and leverage, you can- might be able to achieve a higher valuation. So the thing SPAC sponsors realize, and they realize the whole thing, is finding that arbitrage, identifying the companies that'd be better for the public markets. So let me ask, I, I wanna hit you with one other thing that I've kind of been seeing and taking note of. I mean, you know that before AI, it was really a lot of companies, life science was just a, a hot place for people to invest. Um, and it seems that everybody started reallocating their dollars into AI and away from life sciences. And so life science has kind of fallen out of vogue on the IPO front for a lot, and we see that, we see that there's been some life science deals that have been coming out on SPACs. Do you think that that's really a, a path forward that the life science companies should be embracing and, and running toward? I see a lot of them are still just trying to push for an IPO. Yeah, no, life, the life sciences, biotech cohort, there's a lot of really interesting kind of companies out there, right? Yeah. And I think that's where a, a really, really high quality blue chip SPAC sponsor, right, can add a, an immense amount of value. There's a couple of these SPACs raised by these premier biotech healthcare funds, right, where it, they can add a ton of credibility, right? Because they can lend their halo effect, right? Just saying, look, they're validating the technology, validating the business, right? And they can anchor a pipe, sometimes bring in their friends and family, right? So I think actually in biotech life sciences, the value of a SPAC is actually pretty exceptional. If you look at kind of- Yeah … over the years, some of the most successful de-SPACs have been these biotech life sciences companies. Interesting. But the problem is, look, you do wanna find a sponsor that does understand the space. This is where generic SPACs or industry agnostic SPACs probably have a little bit of a disadvantage. Got it. So let's, let's shift gears. I wanna talk real quick about targets and regret. So you've, you've seen so many DESPACs. Do you think that any of them have regretted the decision that they had to go public? If so, why do you think that is? I truly think in kind of my heart of hearts, a lot of these companies have, who have gone public during that '21 vintage, right, where the market was booming, right? Um, they'll, they'll, they'll kind of complain about their share price trading down, right? But at the same time, look, they were able to go public at really attractive valuations. They were able to raise a lot of money at a cheap cost- Yeah … of capital, right? Um, look, oftentimes these companies have done well and survived. I would say not a lot of companies I know have regretted the decision, right? To go public, it is a pretty long and arduous and conscious decision, right? Yeah. I think a lot of them wouldn't take that decision lightly. I would say, look, the, the more important aspect of regret is, look, a lot of these companies that missed the window, right? If you look at some of these sectors are being disrupted, whether it's quantum computing or whatever it is, right? The companies that have gone public that have taken advantage, right, uh, allows them to capture more momentum, more public markets mind share, right? I think a lot of companies that realize by missing a window, right, it actually hurts them more. I know more companies that actually have regretted not going public. Man, I think that's so well-stated, and it goes back to kind of a, a bang, just a banging drum that I've been doing on this show. And so if you're private looking to go public and considering a SPAC, just let this… And, and you've listened to my stuff before, listen to what he said about the valuation component because people will fight and fight to get the highest possible valuation as a private company. And I get it. A lot of times that makes sense. You want to get the best return you can, get the best value you can. But the reality is, is the SPAC team can give you whatever you want, but at the end of the day, once you're public, you may have created your own monster that you have to contend with, and you may be living in regret when your stock just crumbles into oblivion because of the fact that the market didn't agree with the valuation that the SPAC team was willing to give you just to, like, to get the deal done. So don't push as far as you can on it. Remember that you've got to, like, you've got to pay on this every day as a public company. And, like, you don't want to have that be this looming thing to where you're fighting delistings, fighting short sellers, and all of these other variables. You want to mitigate that and minimize that. Um, Brandon, uh, do you have, before we flip to anything else, on the valuation part, do you have any tips regarding that that you would give as a guy who's done so many DESPACs? What tips would you give on valuation to these private companies for them to consider? Like any axioms of wisdom? Yeah. Like the valuation, I would think it's the most important decision for a lot of these companies going public, right? But, like, at the ti- at the end of the day, it's a static point in time consideration, right? Because once you go public, you're gonna trade where you should trade, right? Yeah. So if you go public at a higher valuation, right, it's not worth it if you can't maintain that price. Say, uh, you know, uh, conversely, right, if you go public at a valuation that, look, maybe you're leaving a little bit of room for upside, right, you're basically giving yourselves the opportunity and positioning to trade up, right? And oftentimes momentum begets momentum. If you trade up, it's much easier to be able to kind of get more eyeballs, get more support, right? So valuation's dynamic, right? That point in time valuation, albeit important, right, it's not the be all and end all, right? Because, look- Yeah … life as a public company is a long, long time. That's the, that's the game plan, right? That's the hope. So, okay, let's, let's talk about this,'cause we talked about kind of the, the aspect of some people that may be naysayers who have gone through it. What's an example you can give me of a company to where their story completely changed because they did a de-SPAC and the, what it opened for them? Yeah, yeah. The perfect example is a company called USA Rare Earth, ticker is USAR, right? I was a sell-side advisor for this company, right? At the time, they were number two player behind MP Materials, which is the number one public company, right? They were also an ESVAP. They kept on losing out to MP, right? Whether it's strategic partnerships or various contracts, right? They realized to really be able to accelerate their trajectory and best position themselves to succeed, they needed to be public, right? Have access to public currency, be able to play offense, right? So I took them public through a SPAC, and they did incredibly well, right? They've only closed about 14, 15 months ago. But since going public 16 months ago, right, they've raised $5 billion of capital in public markets, some from the US government via grants, some via kind of, um, raising public common equity, right? And now they're doing really well. They trade over $18 a share, right? Let's go. And, uh, over $4 billion market cap, right? A perfect example of a company that realized, look, they're at an inflection point. They could either, um, kinda, um, let the moment pass them by or take the bull by the horns, right? And they did the latter. Yeah. And they don't… And, like, they've been on this amazing New York ride ever since. That's, uh, that's really cool. I, I love when I hear stories like that because that means that you had a good SPAC team doing a good deal with a good company and, like, and the fruit of that ended up being a good reward for everybody that's involved. That's phenomenal. So, okay. Um, I wanna switch gears and I wanna talk about you personally just real quick. Um, a couple of things. Let's see. Um, you're an investment banker. People say that what you do is really long hours. Like, I mean, everybody kind of hates investment bankers. If … That's kind of the theme, is that you guys are always just crooked and whatever. You know, you hear all that kind of stuff. Um, I, uh That hasn't been my experience with you. Everybody I know actually loves you. But, uh, it's kind of, it's kind of crazy. But, um, but I want to just ask, like, for you, if you could do any career in the world, what would it be? Yeah. It's a, it's a really good question and, like, I've thought about it many, many times and over many years realized, like, this is the perfect job for me, right? And- It's good to be king? It's, uh … It's good to, good to be in the seat where I have the opportunity to advise some of the smartest sponsors on earth, right? Mm. Some of the best quality companies that want to go public, right? And a lot of it's, like, uh, deeply rooted in terms of my background, right? I, uh, am a first generation immigrant. I, uh, came to the country when I was six from Asia, China. Mm. Uh, I didn't speak any English, right? Like, you know, we grew up poor and it's one of these things, right, growing up in some ways on the fringes of society, right? Where, like, uh, people didn't listen. We were in some ways disenfranchised, right? But to have this job where people are not just listening, right, and valuing my advice. They're actually paying us for advice, right? It's incredibly gratifying and rewarding. So I think in some ways I have the best job in the world. Um, so no, it's, uh, every single day I come in, I get excited and love what I do. Man, I love that. I, uh, I will tell you that for me, knowing that you're a first-generation American, like, I, it… I don't know. For me, um, it- it's one of those things to where I, uh, I think that that's a special place because I know that, like to your point, it is extra adversity. You know? Maybe, yeah, you were only, you was only six when you were here, so your brain, like, your neuroplasticity, you know, was still phenomenal. You were able to adapt quicker, overcome, you know, whatever. But, but nonetheless, like, what that had to mean for your parents and what they probably sacrificed for you, um, I imagine that you probably haven't taken that for granted, and that has a lot to do with the drive that's gotten you to where you are, and just the humility, um, that you've had to operate with as you've climbed up the ladder. So I respect that a lot. I appreciate that, man Where in China? Uh, I was born in Shanghai. Shanghai? Yeah. Got it. Where, okay, w- I'm, I'm showing my ignorance, my Chinese ignorance right now. Is Shanghai, like, is it coastal? Is it flatland? Is it mountainous? Like, what's the terrain there? Um, it's coastal. It's, uh, it's by the sea. It's China's biggest city. Um, very cosmopolitan. So it's bigger than Shang- than Beijing? Uh, bigger than Beijing. Bigger than Beijing. Oh, okay. It's very cosmopolitan, you were saying. Very cosmopolitan. Um, but when I was six… It's changed quite a bit, but, um, yeah, every s- every time I go back, it's, uh, a vastly different place. Wow. Okay. Very cool. Now, do you… Like, do you find that you, uh, that you do a lot of business coming out of, out of the APAC region because of just your connections and your, your root identity there, or has that not really been a thing for you? No, it's a, it's a good question. So there's a couple niches we developed, right? Um, we're very dominant in certain sectors like rare earth and quantum computing. In certain regions, we're also very dominant. For example, we're very, very, um, active in Australia, right? We are the- Okay … number one bank in terms of our expertise there. We partner with a firm called Hall Chadwick. We do pretty much all the Aussie de-SPACs. Uh, Asia as well, we do a lot. I would say in terms of the highest quality, highest profile Asian de-SPACs, right, we're typically their bank of choice. There's a company called Webull that went public. It's a five billion dollar company, right? Some of their heritage was in Asia, right? Um, we were their sole bank as part of their de-SPAC, right? Uh, one of our clients is SK, the second-biggest conglomerate in Korea. So we do a lot in Asia, and I think as a region, I'm personally very invested in the region, right? Just because I'll go to Asia about once a year, right, um, to cultivate clients. One of our clients, Black Spade, which is kind of the sponsor of choice in Hong Kong, right? Um- Mm-hmm … they're seeing a lot of activity, right? There's a lot of companies in kind of greater Asia. They want the prestige of a US listing, right? They want the cachet of a NASDAQ or an NYSE, and they re- again realize that the SPAC is really the best way to do it. So a traditional IPO, like, it's already hard enough, right? Even multi-billion dollar companies in the US can't go public. If a company in Asia now wants to do a regular IPO, there's almost no chance, right? So if they really, really wanna best secure their chance of going public quickly, a SPAC is again the best way. So let, let's talk about that really fast. Um- Do you find that Nasdaq or NYSE, that they're, that they're giving the same pushback on de-SPACs with APAC region? Or are they just throwing their hands up saying whatever and allowing them to go ahead and go through, which is the absolute opposite of what they're doing for IPOs So for de-SPACs, Nasdaq and NYSE, right, the approval process is a little bit longer, a little bit more onerous, right? But for a high-quality company, right, when I say high quality, right, that's really the key word, right? Yeah. Nasdaq and NYSE will both approve, right? Um, I think really kind of, uh, the main constraint, the main bottleneck is again the investment banks, right? The Goldman Sachses and JP Morgans, right? They decide who's good enough and who's not good enough to go public, right? I think that's the challenge. Right now there's so many high-quality US companies that wanna g- go public, um, they're just IP-ing those c- those companies first, right? If you have a high-quality company, right, out of Asia, it's incredibly difficult. It's incredibly challenging for them to kinda, uh, accelerate them in line. So that's why for a lot of these companies, the SPAC is really the best choice. Mm-hmm. And by the way, it's not just Asia, right? It's any region outside the US, maybe it's European companies, maybe it's South American companies, maybe it's African companies, right? We de-SPAC'd a lot of companies in Europe and Africa and South America as well. Again, it's that theme that, look, if you wanna go public and do it quickly and do it on your terms, right, the SPAC is the best way, versus relying on these big investment banks. I like that. Now, couple of things. Number one, I don't know if you know this or not, but I actually got a… From my executive producer, he sent me a text message the other day and he said, "You're famous in Hong Kong." And I was like,"What?" I just sent him a question mark back, and then he sends me a screenshot showing that we were ranked, like, 50 in Hong Kong on Apple Podcast for, uh, for investment and business category. And so, like, we're, we're giving you, uh, we're giving you some frontage in front of that region right now. But, um, but I also, I didn't know if you know this or not, did you know that second to the United States, Australia is the most litigious country for securities litigation? I, I could see it. I could see it. I mean, uh, they have a pretty sophisticated financial markets and pretty sophisticated investor base. I would… It would not surprise me, so. We're a little bit over 70%… Or pardon me, we're a little bit over 97% of all global securities litigation. Wow. And Australia makes up about 2%. And then- Go ahead.… the rest of the… It, but I mean, it's a, it's a distant second, but they're still second. They're still second. So man, let me ask, I, I just wanted to, to hit you really with, uh, with kinda one more thing on the business side, I think. And then from there just kinda close out with, uh, with something a little more personal. From, from a business standpoint on, on these private companies- That are looking at going public and doing this DESPAC. For them, you know that you keep talking about how if they're good companies, if they're disciplined companies. I really want to know what is the commonality that you have found from the companies that crumble and the companies that climb. Outside of valuation, which we've already talked about, what else do you really feel like is something you see that's a common denominator? Yeah. The common denominator in my mind is really laser focus, right? Um- Mm. Sometimes I just meet these management and founder teams, right? And sometimes it's the twinkle in their eyes. Sometimes you can just sense, look, this is what they've been achieving and working on their entire, uh, kind of careers, or last couple years, right? Those are companies that do well, right? Because they will go public and list no matter what adversities come their way, right? What market uncertainties, right? They'll fight through it, right? Whereas, I'll be honest, there's some companies that are looking at it really as a free option, right?"Oh, can I do this to go raise $100 million or $200 million," right? Those, right, the moment the kind of going gets tough, right, they'll rationalize and find excuses to back out, right? They'll say like, "Ah, I'm gonna drop the process and pause the process," right? Whereas the former, right, the companies that have a laser focus on doing this right, um, they'll fight through whatever, uh, it is to get the job done, right? And I think that's, that's, that's vital, right? As bankers, as advisors, right, we want to be able to support those companies, right, who want to get to the promise land. Yeah. And we want to do everything we can to support them in that. I like that. Yeah, I, it comes down to, to really the, the passion for it. Do you have the grit? Do you have the passion to see this through? Do you have the drive to get it across the finish line and to come out the backside committed to the process? Because discipline is doing what you don't wanna do to get the results that you do want, right? And so I, uh, I, I see that. I think, uh, it's, it's the passion and the discipline that's really there. So, okay, final thing that I wanna run by you, and this is on, more on a personal side. So you're born in China, you live in New York, maybe Jersey, I don't know. Depends on if you're, if you're rocking more of that suburban family dad vibe or not. But, uh, but let me ask, everywhere between here and the other side of the world, what's the most remarkable place that you've ever been to to experience God's creation of nature, and the most remarkable place that you've ever seen in experiencing the, the beauty of culture somewhere? Ooh, that's a good question, and, uh, there's not gonna be a right or wrong, right? No, man. No judgment. Um- No judgment. Yeah, um, I continue to be fascinated and re-fascinated by New York, right? It's, uh, it's not just arteries of finance, right, but it's such a dynamic place, and it just constantly reinvents itself, right? Right now, like, um, in New York there's, it's a bastion of kind of creativity, right? New entrepreneurs, new founding teams coming up with great ideas, right? Um, there's constant energy and honestly a lot of diversity, right? Anything you would want- Yeah … globally, right, you can get in New York, right? Any type of cuisine, any type of culture, right? Yeah, look, nature and space, right, you're not gonna get a ton of that, right? Um, it's a trade-off, right? But I think for everyone young, everyone kind of, um, kind of in their late 20s, early 30s, they should try to experience New York once in their life, right? Maybe to visit, maybe to, uh, live for a few months, right? Um, I moved to New York probably 14 years ago, right? There's never been a dull moment, never been a dull day. Got it. Got it. Well, man, I, I'm just glad that you shared time with us today. I guarantee that this is gonna be something to where a lot of people are gonna learn from it, take wisdom from it. Um, is there any final thing that you would want to say to these audience, to these private companies before we close out? Any other thoughts? No, I think, um, I think in some ways, right, look, action and forward progress is vital, right? And growth and the growth of kinda corporates, right? Um- Yeah… it's one of these things where, conscious decision, right? To not move forward, right? And sometimes, right, you're letting the world pass you by.'Cause right now there's an incredible opportunity to public markets, right? Uh, where valuations are robust, demand's high, right? Uh, animal spirits are back, right? A lot of these companies that are going public, they're doing phenomenally well, right? Whether it's raising capital or elevating their brand. So I think you have a phenomenal opportunity over the next couple months, maybe couple quarters, to take advantage of this window. I love that. Well, everybody, again, I've got Brandon Sun today from Cohen Capital, and Brandon is one of the top investment bankers that you could go to on the SPAC, DESPAC side. Number one on DESPAC, um, I'm pretty sure all time. He's probably got more tombstones than anybody for that. But, um, but Brandon, again, thanks so much, man, for being here. It was a pleasure and a blessing to have you on the show. Chaz, I, I'm privileged to be here and share the stage with you, and thank you so much for your audience and your time. And, and once again, I just have to conclude this is merely my personal views and doesn't represent any investment, uh, advice. I love that. Everybody, hey, Chaz, your host of The DESPAC Podcast with Churchwell Insurance Agency. Thanks for tuning in. Blessings. Have a good one.