What Makes a Good SPAC Target (and What Disqualifies One)

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What's going on everybody? It's Chaz, your host of the DESPAC podcast. This is, uh, this is a two for one today. You got, like, you've got buy one get one free. We've got Patrick and Dimitre from Brookline Capital. These guys are phenomenal, phenomenal SPAC investment bankers, both on the SPAC side and on the DESPAC side. Uh, you'll find particularly if you're somebody that's involved in life science or rare minerals, these guys are a sweet spot for you, so make sure that you listen in. You don't wanna miss a word that these guys have to say. So Patrick, Dimitre, how's it going? Great. Great, Chaz. Thanks so much for having us. Thank you. Man, so fired up to have both of you here. So Dimitre, I gotta ask, did you guys wear the, uh, the same checkered pattern on the, on the shirts today on purpose? Is it, like, checkered Thursday? It is. It's the standard- uniform here for the, for, for the office. I like it, man. I like it. So, uh, real quick, if, if you could do me a favor, um, Patrick, if you could take one moment and kind of just give a high view of who Brookline is from a SPAC side of transactions, and Dimitre, if you might be able to step in after that and just kind of, uh, give a heartbeat for who Brookline is just from a cultural standpoint. So Patrick, SPAC, DESPAC, Dimitre, just kind of the heartbeat and, and the culture of who Brookline is. I'd really love it. Sure. That's great. And, and again, Chaz, thanks so much for, for having us. You know, it's always good to catch up with you, whether it's on this podcast, at the conferences, on, you know, on the s- you know, s- same side or opposite side of the deal table, you know, we, we see you all the time out there getting stuff done, so we appreciate this. So- Sure … um, you know, look, Brookline, we're, uh, about a decade old at this point. Y- we originally were formed to focus on healthcare as an industry vertical, but very, um, early after our inception, we decided to focus on SPACs as well, and that was, a, an effort, um, that my partner Bill and I said, you know,"Look, this is an area, you know, with my background in mergers and acquisitions for many years, with Bill's background in the capital markets when he was CEO of Lazard Capital Markets," we thought SPACs was an area that we should focus on. And this was 2016, 2017, before kind of the, the last boom cycle. And so fast-forward now, um, to 2026, you know, I've got the honor of having Dimitre, you know, join the team as well, brings a, a tremendous knowledge and experience base, uh, from the, the buy side. And you know, what we really like to focus on here is, you know, working with those private companies in their transition, you know, from private to public, uh, markets, working with the sponsor teams to identify good potential target companies as well and helping to execute through the process and working with all of the service providers, you know, legal, audit, gentlemen like yourself on the insurance side, to make sure that our client, whether it's the private company or the sponsor, have as seamless, um, you know, as possible execution. Dimitre Yes. Um, thank you for the time. We, we really appreciate the opportunity to speak with you and your audience. Um, as Patrick mentioned, I've been here for about, uh, two years, and I've really enjoyed the experience. I think what's unique about this place is that there's a lot of, uh, seasoned professionals. I would say on average, uh, the bankers here have 30, 40 years of experience. They've been in the big firms, they've been in some smaller firms, so they bring a lot of expertise and really differentiated experience. We have people from the buy side, people from the industry. So when we approach a transaction, we look at it from the lens of a banker, we look at it from the lens of a corporate executive, we look at the lens… from the lens of an investor. Um, so we, we bring this sort of very diverse perspective 'cause we've sat on each side of the table, and I think that's, you know, our clients find that very, very helpful. Appreciate that. And, and for those of you who don't know, just real quick about Dimitre, uh, he is a regular contributor to SPAC Insider and, uh, he has a kind of a little blog post that goes out regularly called SPAC & Forth. And, uh, Dimitre, you- your stuff that you put out there, um, almost every week when I read your stuff, um, I, I find something that's just a remarkable takeaway, so I really value your contribution to the ecosystem and, and what you're doing. And, and I mean, a lot of people, they wanna go to Harvard and they wanna learn from Harvard. I feel like Harvard tries to come to you and just learn from you. Like, you're, uh it's like… I mean, seriously, you're, uh, you're just a, a brilliantly smart guy. So let's dive in. Let's start talking about private companies looking to go public, considering a SPAC vehicle to do that. So what do you guys feel makes for a… Like, I'd, I'd love to hear Dimitre, what do you feel makes for a good SPAC target, a good private company to do a deal? And then Patrick, I'd love if you could juxtapose that and tell me, what do you think is kind of a disqualifier? Um, what really keeps somebody from being a good SPAC target? Yeah, no, that's, that's a great question, Chaz. I appreciate, um, the opportunity to kind of discuss kind of what makes, um, SPACs more competitive, um, against other ways to go public. And I think where SPACs remain most competitive, um, uh, exactly where traditional IPOs are perhaps least equipped. So that's why in many ways people call SPACs the special situation IPO. And there's three categories, um, that stand out. Um, first, kind of more complex corporate transaction, you know, spinoffs that, you know, may need to raise capital at the moment of separation. Uh, you could potentially use, um, a SPAC to do a roll-up, you know, unifying acquisitions in the go public event. Um, you can potentially use post-reorg, um, equity, uh, to clean a balance sheet, um, you know, when there's no natural investor base. Um, so, um, a traditional IPO, for instance, cannot raise fresh equity at the, at the spin of it. So that's one kind of more complex corporate transactions where, you know, SPACs are kind of best used. Another area which I think, you know, we're seeing increasingly sort of, um, using SPACs is international uplistings. Um, you know, Europe, Canada, Australia in particular have produced really, um, exceptional companies. Um, you know, we've seen that in nuclear, we've seen that in quantum, we've seen that in deep tech. Um, you know, because the domestic market's not really well-equipped, um, to finance those companies, their scale, and, and the US public markets can, can achieve that. Um, and, and third, where we see sort of SPACs being particularly sort of competitive is, um, hard tech companies. Um, companies that require, um, patient capital, um, extended investor education. You know, a two-week roadshow cannot really explain quantum computing, advanced nuclear, um, you know, and, and some of the other kind of innovative companies that we see that go public with a SPAC. And, and the SPACs allow that educational, um, cycle to breathe and kind of bring that information to investors. So, so, so basically, you know, wherever the story is complex, the timeline is long, and the capital structure needs to be engineered alongside kind of this… the, the listing, you know, the SPACs remain s- superior and a better vehicle for a public listing. Appreciate that. Patrick, what are some of the disqualifiers, the kick-outs? Sure For private companies thinking about, you know, potentially merging with a SPAC, the items that would disqualify them are the same things that would probably disqualify them to go through an IPO process as well. Um, I would say the first item is size. A lot of times you see smaller private companies, and, and when I say smaller, it's in terms of their revenue or their EBITDA, or for example, if it's something like a, a biotech, it's, you know, single product, very early stage. Um, and, it, you know, for the most part, the valuation of the company is less than 50 or 100 million, and they wanna be a public company. And they just should not be a public company. They shouldn't be a public company, you know, through a traditional IPO route. They shouldn't be a public company through, you know, a DESPAC transaction. And we're seeing the exchanges, you know, take a harder look at, you know, some of these micro-cap type of companies that are, that are trying to list and go public. I think that's the first thing. I think the, the second thing is the … I don't think sometimes that management of these private companies understand the complexity and the additional cost and the additional structure that they need to be a public company. Right. The, you know, quarterly filing costs, the, you know, um, uh, uh, uh, the, the board, right? And, and ha- and, and having to compensate your board members. Um, the, uh, uh, for, for the companies that have research coverage on them, having to You know, talk and, and interact with the research analysts. I think there's a lot more work to be done as a public company, and they really need to weigh the trade-off of having that public listing. Is it worth the added cost, the added time, the added headcount I may need to bring on? And, and I think that's, you know, I think, I think that's something that private companies need to consider more. And then the last thing I would say is, and this is more specific for the time that we're living in now, but, you know, it's I think much more difficult for companies coming out of Mainland China, Hong Kong, Southeast Asia to try and list in, in, in this market environment. And we are seeing a lot of candidates wanting to try and list, and I just think- So many … it's, I just think it's a difficult time for them. Yeah. And, and for a lot of those, the solutions that we're seeing are if they have US assets or a US division or if they can bifurcate or, or silo that group and have just that US division focus on being the public entity, um, is, is, is one path to go. But I think, um- You know, for those companies, instead of wasting the time, effort, money, it's probably best to kind of wait and see when the market changes and then contemplate coming into either a DESPAC or an IPO. So I, first of all, I want to affirm that I've seen so many of my clients that they've just hit wall after wall coming out of APAC region to where they're just… NASDAQ is just quiet, nicey, says no. Um, guys that normally it, it would have… Like, they check all the other boxes except for the region of the country that they're in, and they're just really saying no for right now. And so yeah, I mean, because you still have to go through SEC, you still have to… Like, you're still dealing with the exchange, everything like that, even if you're going through a SPAC, so it's still quite cumbersome on that way. The other thing is, I'd really love if you could speak to this. Um, I actually had this come up at the SPAC conference. Somebody was asking what phase does a pharma company need to be at in trials before they actually become a good candidate for a SPAC to go public? And I was, in my mind, I'm thinking you've got to be starting stage three. But, um, anything that's pre-stage three, it, it's a big hurdle, and really you should probably still be taking private money, in my mind. One… Yeah, and I think the only caveat that, that I would have to, to that, um, Chaz, is- That's if you're, you know, potentially you're a single asset or, or maybe- Yeah … you know, o- o- one or two assets. We are seeing some companies that are more platform companies that have multi-asset, uh, you know, at different stages. Yeah. And they may have two or three assets that are phase 1B, phase two. They might have a nice pipeline. The other thing is, too, w- what is the target area, right? So for example, we see, you know, GLP-1s, as we were talking about earlier, is an area that, um, that is a very hot segment of the market. And- Mm … if you are a little bit earlier stage there, you, you know, I think that is, that is attractive, the valuations are strong, and you might have an opportunity. Um, and I think there's some other areas of the biotech sector where you might not have to be in phase three. You could be a little bit earlier, but, you know, based on, you know, the data that you have, based on, you know, if, if this is a therapeutic that, again, can be used, uh, across different, um, different areas, I think there's potentially opportunity for those companies as well. Yeah. That makes so much sense, and I appreciate you giving the insight on that. In this particular case, the guy had one product and he was in 1B, and I was just like- You're, you're 100% right. That would be extremely challenging. Yeah. And again, that's something as a DESPAC or as a, or as a traditional IPO candidate, that company just should not be public with just- Yeah one asset at that stage. Yeah. I, so I, I agree. I agree. So, okay, let's talk about sponsors because as you can appreciate, guys, the, the sponsor team matters. There's different value propositions that they can hopefully add, um, that go just beyond the capital that can come by having a SPAC team that you do a deal with. Uh, Dimitre, I'd love to hear from you. Like, what are the best sponsors bringing beyond capital? I s- um, yeah, so I, I think, um, a lot of sponsors, um, think that, um, once you have filed, uh, the S4 has been cleared by the SEC, the vote is done, that their job is done. They're already looking at the next, um, SPAC. But, um, I think the, the best sponsors are those that can really add a lot of value post, uh, close. Um, you know, I was looking at a study that was done by the Kestrel Phoenix Fund, and their research shows that there's a consistent pattern, um, especially those, um, SPACs that closed kind of in the last cycle, '21, '22, '23. There was sharp declines in, uh, years one, uh, and two post the close, um, followed by meaningful recoveries in years four and five, because by then the management had changed, there was cost resets, the balance sheet has been repaired. Um, and so a lot of these companies are kind of going through these transformations in the first couple of years, um, just to be reset and, you know, behave like a real public company. And so the, the, the question is, why not do that, um, you know, in the first year or while you're closing the SPAC? You should really position the company, you know, make sure the management has the right alignment, incentive alignment, um, review the cost structure, you know, rationalize the asset base, think about what is the right product. So, so really the companies that can, can hit the ground running, um, without having to wait for two, three years to kind of do that reorganization and, and, and righting the ship, um, I think that those would do the best. And, and really you need the sponsor who can add that value, um, you know, um, while they're, you're closing the SPAC or immediately after. Um, so that's what I would say is kind of the, the best sponsor that can really kind of add that additional value to the, to the company. Now, I, I wanna stay with you, Dimitre, for, for one second. You actually did something on your SPAC & Forth recently where you talked about private companies that were, that were, uh, dealing with a bankruptcy, and you talked about bankrupt private companies potentially being great targets. Could you unpack that a little bit? Because there might be some people that are here looking for hope, for a lifeline maybe to turn around their company because they believe in it and they know that there's some things that are there, or maybe a new CEO stepped in, they've, they… like, the leadership team filed bankruptcy and, and now a SPAC could be, uh, the great lifeline they need to, to project their vision forward. Yeah, I know for sure. I, I spent before joining, uh, Brookline, I spent about twenty years in event-driven investing and looking at post-reorganizational equities, uh, was something, uh, very, very common for people in the event-driven investing space. Um, so when a company, um, emerges from, from bankruptcy kind of in that post-reorg phase, um, you know, a lot of the investors, uh, that end up holding equity are the former debt holders. They're not the natural investor base. Um, they wanna get out. Um, there's no really a proper roadshow or reintroduction, um, i-into, into the, uh, public arena. Um, so that process initially kind of depresses valuations and, and it's a-- it, it can be potentially a very slow process, and that's where a SPAC can add a lot of value because obviously it brings a, a long marketing period. Um, it brings fresh capital to, you know, um, sort of reorganize and, and add additional equity to the business. So, so that can be very, very, uh, valuable. Now, of course, a sponsor has to evaluate, you know, the reasons why the company went into bankruptcy. Um, was it a liquidity crisis? Um, you know, a great business that just kind of experienced a difficult moment, uh, but remains a good business. Those are the best opportunities, and those have returned a lot of, um, you know, great re-re-returns for investors. Or is it a business that is in a structural decline, secular sort of headwinds? Um, those are very difficult. Even with the clean balance sheet, uh, potentially outcome can be, can be poor. But, um, you know, the need to, um, re- uh, the shift the investor base and the need to raise additional equity and reintroduce the, the company to public markets, that's where a SPAC can play a really vital role. Um, there was an example of that, Algoma Steel, um, that went public, um, with a SPAC post-reorg. Um, you know, it's been a bit challenging, uh, their business, but, but that was well executed. I know some other people have tried to do that as well. Um, but, um, in general, I think especially if we get into a private credit cycle or with the potential of bankruptcies, I think that could be potentially fertile gri-ground for, for opportunities. I appreciate that. I appreciate that. All right, so Patrick, um, wanna, like, I wanna hit you up. Before we actually went live, our executive producer, Josh, that knows you, he made a comment. He was like, "Man, you've really trimmed up." And, and you of course, you made, you made light of it and gave me credit and me putting you on a meal plan and everything. But, but man, I gotta tell you, he was right. You, you do look good. You do look like you've, you've lost some weight. I mean, you mentioned GLP-1s. Like, is, have you actually been hitting the gym? Is it a GLP-1 thing? Like, could I ask, like, what's going on? And- Oh … 'cause we need the secret sauce. Sure. Yeah, no. It's, um… So I think it's a, I think it's a couple things. Not GLP-1s. Um, I think they're, you know, I think they're a great product. I think they work for a lot of people, um, especially people that, say, are predi- predisposed. Um, but you know, honestly, it's, uh, I think the last time that I, I filmed with Josh, my wife was pregnant with our third child, and I had a- You had the- three-year-old and a one-year-old. And there was a lot of, uh, a variety of food around the house- … um, that, that, that I was picking on. So, so, so now that, um, you know, the, the baby's been born and, you know, the, the, the, the snacks have been cleaned up a little bit, you know, just kinda stay- staying away from those and, and just, again, making time just to, uh, just to get, get into the gym. Dude, I love that. I love that. Hey, and I mean, it's awesome that you're spending so much time around your family and prioritizing them that you're able to rob the pantry. So that's a good problem to have. It means you're a great father and husband. So let me g- let me continue with re- you real quick. I wanna find out something. Um, obviously you can do a direct listing to go public. You can do an IPO to go public, but I'd really love to figure out what makes the SPAC differentiated special. Like, what is it that a company that's private looking to go public and they're exploring a SPAC as their go forward, what do you believe is the real differentiator that sets it apart from an IPO or a DPO as a value proposition? Sure. So I think if we break this down into segments, I think, one, the- Confirmation and, and locking in of the price. When you sign, you know, the definitive agreement as a private company to merge with the SPAC and you're locking in, you know, what that price will be, you know, your shareholders of a private company know this is what we're, you know, um, th- this is the valuation that we're receiving, um, as part of this process. Now, look, of course, once the DESPAC completes, there may be, you know, some volatility in the pricing before, you know, those shareholders' lock-up is over and they're able to sell. But, you know, the conversion of those private shares into public shares are locked at that pre-IPO price, or, or locked at that, that, uh, DESPAC price. So I think that, that is important because with a traditional IPO, um, and there's, you know, benefits as well to, to a traditional IPO. But o- one difference there is you can be preparing to go public, the market can look great, you can get good price determination, and there's some event that happens that might not have anything to do with your company, might not have anything to do with your sector, some traumatic macro event and the market collapses and you need to decide, are, are we able to price or not? And, and, you know, and a lot of times the, the price, you know, might be changed. So, you know, locking in the price, and then I would also say locking in certainty to execution. So I think the second piece of it would be locking in certainty of execution. Yeah. And so once you've signed those definitive documents and you've started to move along the path to close- Of course, certain things can happen, you know, if you have a cash condition to close that you're not meeting. Um, we had mentioned earlier with some of these international targets where they've gotten delayed getting through either the SEC or the NASDAQ or NYSE approval process. But that's why, as a sponsor, as a private company, before you even sign those definitive documents, before you even flip public, you basically weigh what all those potential risks are. And so I think you've got a higher certainty to close than through a traditional IPO route. And I think the third thing is you can do some interesting things with regards to structure that you can't do with a traditional IPO in terms of earn-out- Yes… in terms of additional financing that you can build in around the DESPAC process. You know, raising capital in advance of the DESPAC, but with the certainty knowing that you have that SPAC closing on the horizon. Um, there's a lot of other non-redemption agreements, pipes, other types of structures that can be put in place for the target company and the DESPAC that you can't do in a traditional IPO process. So I think those three factors are, are important. Got it. No, that's, that's solid, and agreed with all of it. I like that, uh, I, I like to think of an IPO and a DPO kind of being like a box, and then a SPAC really just being a canvas, you know? Like it's, uh, it's something to where you can really, y- you can really actually paint a box on it, or you can paint a bowl, or you can paint whatever, you know? And there's just like, it, it's almost more like art because of the creativity that could go into your structure. Um, Dimitre, I w- I want you to talk to me because whenever we talk about SPACs, we can't talk about SPAC trends without acknowledging, um, that deal structures have been a just Wild West lately all over the place. Um, rights, warrants, over-fundings- Sure … uh, transaction deadlines, everything like that. So I'd love to hear from you on really, at the idea of a right versus a warrant. So when we've got these private companies looking to go public, they conceptually understand what a right is, what a warrant is. But, like, when you go and actually think about the, the, the chess of it, you know, when you look a few moves down on the board, like could you talk about some of the, the pros and cons of a rights structure versus a warrants structure? Absolutely. Um, look, and I'll, I will, um, provide my views from the perspective of the target company because obviously- Yeah … um, you know, investors, um, have different, um, you know, incentives and views and, and outcomes. Um, from, from the perspective of, of the company, look, both structure, um, as you said, have pros and cons. Um, the, the pros of the, of the right is, um, that they, um, you know, eventually result in a cleaner capital structure. Uh, they convert into shares at the time of the DESPAC, so, um, the legacy, um, of warrants which can potentially bring some friction in the market is gone, and it's one class of shares. And, um, you know, um, there's, there's more liquidity as a result of, of the, of the right. The flow is bigger. Um, so these are some of the benefits of the rights. The, the negative is that, you know, they bring immediate dilution because they convert, um, into shares. They don't really bring any additional capital, and, um, and, and so that's one of the, um, sort of the downfalls of rights. Um, h- historically, um, I, I would say, you know, very experienced sponsors, uh, have shied away, um, from using rights for that reason because of the immediate dilution. Um, however, what I've heard from some of them is that, um, some large institutional investors, long-only investors, um, are, um, not willing to invest in companies with warrants because warrants can potentially, um, you know, lead to overhang on the shares. Um, there is investors who, um, you know, play various arbitrage, um, strategies, um, involving warrants, and so that can put potential pressure on the shares. So that's why some of these long-only investors, um, avoid companies that have warrants. Real quick, real quick. Talk about what you mean, 'cause remember, some of these people, they may not have a lot of capital markets experience. When you talk about an overhang, like, could you unpack how that's, um, what that is and how it's a negative? Yeah. The, the overhang is… Basically, the idea is that there potentially some additional shares might be issued, um, at a higher price, um, as a result of warrants being exercised. And, and so that additional dilution that is- Pending, hanging over y- your head, uh, in a way. Um, um, you know, based on, on, uh, the stock price trading at a, at a, at a certain level, um, is something that, um, you know, investors wanna avoid. It does provide a bit of a cap or resistance, if you will, um, to, to the, to the stock price m- moving higher. So, so that's why some of these investors, you know, do not really like, uh, that idea. Now, the, the, uh, benefits of warrants is that they don't provide immediate dilution. They'd only get exercised, um, if a certain price is achieved, and usually that's 15% above the price where the deal is struck. Um, so, so, um, you know, they don't bring immediate dilution. Um, most warrants are exercisable for cash, so they do bring that additional, um, cash inflow if it's needed. Um, so, so that's the, the benefits of warrants. Usually, um, you know, um, the warrants are, um, a third or, or, or half or, or a quarter in some cases of the number of shares in, in the SPAC, so, so, you know, the dilution is, you know, relatively limited. Um, so, so that's kind of the, the major trade-off. You know, do you want a potential future capital, um, that is brought through, through the warrants, uh, but you have that overhang that potentially limits the type of investors that will come into your, uh, o- ownership list, or, or do you want a kind of a cleaner capital structure that comes with some dilution, uh, upfront? I appreciate that. Now, whenever you look down the line… Let, let's say that you're looking three years down the line. You've done your DESPAC, you're three years down the line. Um, do, do you have data on which structure tends to perform better? Or is there even data for that? I don't even know. I just know that you're like, you're masterful at, uh, at, at quantifying those things. I, unfortunately, that, that's a good idea and I should probably do, um, more research on that, kind of the long-term performance of one, um, after the other. Uh, w- uh- I expect a shout-out whenever you post your blog article on that Of course, of course. You will be quoted And credited, um, for sure. Um- Uh, so I, I cannot give you, um, the, the exact answer. I think, um, as I said, um, historically the more experienced sponsors, um, have used warrants. I think it's definitely the dominant structure. Um, and historically the more experienced sponsors have also brought the high quality deals that have performed better. Um, so that's just kind of my, my gut reaction. Um, but we'll have to really do the analysis and see sort of which one, um, has done better, uh, longer term. No, I appreciate that. So okay, let's talk about, uh, le- let's talk about the idea of transaction deadlines. Patrick, if, uh, if you could speak to this, uh, I'd really love it. Like, uh, i- if, if you're a private company, you may not know. SPACs have a life cycle and not all life cycles are the same. Uh, some of them, most of the time historically it's been 24 months, but in investor-friendly markets they may get a shorter life cycle from the institutional investors to get the deal out. So they may get 21 months or 20, or like 20 months, 18 months, something like that, you know? And so, uh, so sometimes they have a shorter leash that they're on to get a deal done. Like, could you talk about the implications around that? And for a, uh, for a target, how does that work for them and against them? Sure. So, and, and this is a, is a great question and, and also I think ties into some of the questions in the beginning of the program where, you know, what makes a, a good potential target? A- or you as a private company, how can you make yourself more attractive to SPACs? So because SPACs have somewhat of a finite timeline to get a transaction done, when they identify that target, they really want that target to be able to go to be a public company. And so what I mean by that is having your PCAOB audits completed, so your, your public company audits done and ready to go to, you know, potentially have materials teed up from a marketing perspective, um, you know, have your board in place. All of the things that you need to be a public company, to try to have those put in place in advance of starting to have the conversation with SPACs. Because once a SPAC identifies you as a potential target, they're going to wanna s- you know, do their diligence and see if it makes sense. But then once you get into that execution process- Y- you know, you're, you have very tight timelines and, and as time goes on for these SPACs, they incur more and more costs and spend more and more money. And if there's a situation where, you know, the private company is waiting to get their audits done, time does not stop for the SPAC. And, and they need to continue to f- keep their quarterly filings up to date. They need to continue to spend money for their service providers. And so to make yourself, you know, most attractive as a private company, I think it's important to be ready to be a public company. And, and also too, and, and, and this is important as well, that- It, it, when you're in a DESPAC process, it may seem like a, a fire drill a lot of times. You know, it may seem like, "Hey, we need to get this in. Why aren't things being turned?" Well, you know why? Because days really matter. And, you know, we've worked on, you know, dozens and dozens of DESPAC transactions, and we have come down where, without exaggeration, one day has, has made the difference. Where, you know, one day because, because somebody did not turn the audited financials, somebody did not get the comments back, you know, on the S-1, you know, because somebody didn't do one which may be considered an insignificant piece, literally is, de- delays the entire process, right? Yeah. And especially when we get around quarter end. And so if, if you've got an, an, an, um, S-4 that's already been filed, and if you're going through turning of comments with the SEC, and you've got pro forma financials now that you're, y- you know, that you need to submit every quarter, you know, because the deal has been announced. And if there's delays and things get missed and you don't get the pro forma and the quarterly audits done in a timely fashion, and it gets pushed, that can be, that can be extremely detrimental to the closing of a transaction. And so I think that's a good, that's a very good point, Chaz, for these private companies to expect of, you know, you may be walking into the process, but once you get into the process, it's, y- you know, you're on a treadmill set at eight. Like, you're running, right? And you're not… It, it's hard to, it's hard to jump off, right? You've got, you've gotta run till your time's up, um, because if you try to get off, you know, you might get banged up a little bit. So let use a little fitness analogy for you. But I think- Set at eight, incline on five. Ex- exactly. No, I'm, I'm putting you up to nine. You're, you're, like, on nine, and you're running at eight, and you're, you know, you're sweating and, you know, you're zone five. Like, you're, you're there, right? But I think it's very important to realize that once you get into this process, there's an expectation of you to deliver. There's an expectation of you to deliver audited financials on time. There's an expectation of you to deliver your comments to the S-4, be responsive to Y- SEC. There's expectations of you as a private company. And if you're not ready to, to step up to that, then, you know, you might wanna wait before stepping into the process Yeah, and I, I would, I would add to that, but … And, and, and I'm gonna flip it over to Dimitre f- but I would add to that that, 'cause you mentioned something that I think a lot of people dismiss. Like, you know how if, uh, if you're watching a, a football game, the kicker at the very end of the game, he, he misses the 45-yarder, and so he blames himself, whatever. But it, but it's not really his fault because there were 1,000 little things that different people on the team, if they had done better at execution on their part, then they may not have even needed the kicker on the field, right? And, and so that's why it's a team effort for everything. And to your point, if, uh, i- if the controller takes an extra week to get something done at the private company, and then the CFO takes an extra three days to get something done, but then the attorney ends up taking an extra week to get something done, and then audit, um, their, their auditor goes on vacation. You know? Like, you've got all these different things to where it's like there's a compounding effect, and if you're not careful, you could find yourself staring down the barrel of an extension which, by the way, private companies, SPAC may be out of money. You may be covering costs to pay for their extension to get this deal across the finish line. So you need to be operating with a sense of urgency because if not, you can't foolishly think that you're not gonna be on the hook for some costs when it's your squad that's not performing at a high clip. That's, that's a great, that's a great point, Chaz, because I do think, you know, it's easy to say, "Oh, well, you know, my auditors didn't get, you know, get it done in time." Well, you know, to, to, to give some cover for the audit, you know, they didn't get the underlying financials from the company until, like, three days before they were due No one can get that done in that time period, and along with the lawyers. And, you know, to your … I, I think your analogy with the kicker's a great analogy, right? Because it's a, it's a very similar situation here where we shouldn't be yelling at the printer to make these changes- … with two hours left, right? Always yell at the printer. Right? Always. Y- yeah. And you know, those poor guys, like- They're never fast enough … 'cause they're literally, they're literally on the firing line, right? They're, they're, you know, they're like the kicker because, you know … And, and, but we shouldn't be in that situation. We shouldn't be sending comments in with 20, you know, 20 minutes to go. There needs to be better process, better prep all the way down the line. Yeah. And, and so I think that's a great, you know, that's a great analogy for people to think about of like, look, and we need that cohesion. It also just brings up another point. There needs to be good communication not only amongst the sponsor with the, with the target, but with all the service providers. 100%. You know, that's, that's another area where, you know, we've seen things break down in the past of the service providers may or may not have good communication amongst each other, and that can lead to delays, and that can really hinder the execution process. So I mean, I'm the D&O insurance guy, so I am the perfect example of this. Do you know that I've had multiple times to where nobody bothered to tell me that the IPO had happened until, like, a day after it happened? And I'm just, like, having to go back to underwriters and beg them to backdate coverage for a day so that the IPO is actually covered or the DESPAC is actually covered. And I'm just like- What? So, um, so I mean, why would nobody, like, communicate that stuff? It's crazy. But, uh, to your point, so but with Dimitre First of all, man, with … I, I realized something as I'm listening to you on here. I realized I don't know where you're from originally. Where are you from? Originally from Bulgaria. Bulgaria. Yes. Got it. Like- You're probably the f- first person that's interviewed a, a Bulgarian on your podcast. Dude, you're the first Bulgarian on my podcast, and I will tell you that just when I think Bulgarian, I think, like, tiny country, really big Olympic heavyweight lifters. And, like, am, am I wrong? Is that a thing? Absolutely. Still, still is one of our most famous exports. Weightlifting is, like- Yeah … is a big deal for you guys, yeah. Yeah. Okay. I was like, dude, I, I felt, I felt like that was kind of your, your thing, that your biggest export is your people. So… Absolutely. So, okay, now where in Bulgaria? I grew up on the, um, Black Sea coast, uh, city of Varna. Uh, it's a beach- Dude, that's why you got such a great tan. It's a beach town. I used to be a lifeguard, a swimmer. And, uh, then ended up, uh, going to college here in the, in the US. So, uh, it was, it was a great time. I, I go back, uh, every once in a while. Um, so I, I love, I love going back. It's, it's, it's a great place. So you're probably really geeking out with, uh, with World Cup being in the US right now? Oh, absolutely. Uh, grew up watching soccer. I was very avid fan of, of a- all the great players and teams in Europe. Um, when I came here, you know, it was a bit harder to follow it. Um, but, but now I'm very excited it's here in New York. You, you get to see games live. You get to see it on the TV. So, uh, it's a great, great atmosphere. So who are you cheering for? Like, who are you thinking's gonna, like, gonna get the W at the end of the line? Um, well, I, I mean, I love the US team. I think they've done an amazing job. Obviously, that's my n- number one, uh, team. Um, been impressed by the, um, German team. Um, they've had a couple years where they're a little bit weak, so, um, but they've done quite well. There's a lot of great- Their uniforms suck, though. Their uniforms are just so ugly. But yeah. Yeah, I agree with that. Um, um, I mean, there's a lot of great teams, I have to say. Um, you know, obviously, um, we've seen N- Norway do well. Um, Brazil, Argentina. There's been a lot of really great teams this year, so it's really hard to say who is gonna be the winner. Right on. Right on. So, okay. Um, let me, let, let me ask you this, um,'cause it, uh, we're gonna kinda wrap up here in just a second, but I've, I've got one final question that's a play off of what we were talking about with Patrick. Uh, the idea of, like, the, the timeline, having to get the deal done, everything like that. And one thing I feel that, that we didn't get into- Was this, the, the concept of, I feel like with SPAC teams, SPAC teams, when they first do their IPO, they're, they're more casual, they're more picky, and then, like, all of the sudden, if, if they've got nine months left on their deal, they're kinda like a drunk guy in the bar, and they'll just be like, "Oh, that one looks good. I'll take it." You know? Like, whatever. And they're just trying to get a deal done so they don't have to liquidate. But then a problem comes. If you, if you don't have the right company, then you fall your- you fall into a position to where… And I'd love to know how often you see this and whenever you… 'Cause you track a lot of this stuff. How often do you see that SPAC teams end up liquidating, not because they found a deal early and the deal just took a really long time to come together, but because they waited a really long time, and then end up picking one up at the last minute, and they either run out of time and have to move into extension, or the deal just falls apart because of the fact that they couldn't get the extension because people didn't believe in the vote thing, or whatever it might be. But at the end of the day, they end up having to liquidate because it wasn't a great company to do the deal with No, that's a, that's a great point, and I see that behavior all the time. Um, there's a lot of confidence in the beginning, um, a lot of faith i- in the process. And then e- every month sort of that kind of sentiment fades a bit until, uh, you know, the, the first year rolls around and then, um, you know, you see people kind of getting sort of a bit more, um, sort of antsy to, to do a deal. Um, look, I think it's good to have structure. I think the teams that win, um, are the very structured and very organized. Uh, because of the, uh, the time pressures here, um, you need to be superbly sort of organized. Um, you have to basically, you know, have checklist, frequent meetings. Um, you have to, um, you know, basically have each of the members of the team have to have their roles and assignments and, and, and, and you have to leave, like, no s- s- stone unturned. I mean, it's really a process of sort of, you know, going out there and, and looking at a lot of companies. You know, the, you know, the ones that win, you know, end up potentially looking 100, two, two, a- a 100 companies over that, over that period until they find the one they like. And then the other problem, um, that you see with, with some teams is that they really wait for the absolutely most perfect company. Um, and, you know, you wait for kind of that absolute gem of a company that ticks absolutely every box, and it's hard, and it's hard to do that. Um, and, and also, um, and it's hard to find that even as an investor, um, you know, to find that company. I think especially if the team has operational expertise, um, I think you may find something, um, that ticks 9 out of 10 boxes and then, um, you know, the last thing that needs some work, um, that's your value add. That's how you create that value. Um, hey, you know, maybe th- this has a bit too much debt. We'll finance it. Or maybe it has a division that's not really that great. Well, let's see what we do about it. Do we sell it? Do we restructure it? You know, um, everything's great, but, you know, they don't have the right product. Well, is there anything we can do to improve the product? So, so these are the things that you can sort of potentially fix, and that's where the real value add from the, from the sponsor, uh, comes. I love it. I love it. No, that's actually, all that's phenomenal. So, uh, guys, do you have anything final that you wanna add as we, uh, as we wrap it up? Just to give you the floor for one moment. I think just to echo Dimitre's point, um, perfect is the enemy of good when- Yeah … uh, with SPACs, right? You know, we've talked about throughout the podcast how much time is a factor. Um, and you're never gonna find the perfect company, but you're gonna find some really good and potentially great companies that are out there. And, and also as guidance for these private companies, you know, you don't have to have everything perfect. You should have the boxes checked. You know, you should have your, again, PCAOB audits. You should have kind of what your board will look like as a public company. You should have, you know, some of the other pieces in place with your team and with your service providers. To your point, get your D&A done, um, you know, before the deal is, is finished. Um, so, you know, I think, but, but don't continue to waste time trying to be perfect. I think, you know, get yourself where you're in a good position to launch, and then from a sponsor perspective, you know, if it's your first time or even sometimes your second time, don't be looking for that perfect target. Look for that, that good target. What's so funny is that you say that, and just as we, as we kind of wrap, like, I, I think that goes both ways because you've got the SPACs that are looking for the perfect target, which, I mean, you guys know that I'm kind of working on something right now, and, like, I've actually got a program that I've built out and I'm, and I've actually already kind of told myself, "If we get an 85 out of 100, done. Done." Like, just, like,"Let's, let's knock it out. Rinse, repeat. Go, go, go." But, like, um, because I, I don't need the prettiest girl in the room. I need the right girl, and that's it kind of thing. But, like, um, but then just thinking about it also from the target's side, like, these targets, um, I, I'll talk to these private companies looking to do a deal with a SPAC, and they're like, "Yeah, we're talking to, like, five different SPACs right now." I'm like, "Why? Why?" Like, I mean, you're gonna end up with paralysis of analysis. You're gonna forget which one was which for which thing, and, like, if you… I mean, you should be able to chisel it down, find the right team to work with, and just, like, and be able to, to get there, um, because they wanna do the deal. You wanna do the deal. Like, you're, like, they're gonna work with you to make it make sense. And I, in my mind, I'm just, I- I'd love to just kind of hear a final thought from, from one of you on do, do you find that targets sometimes get paralysis of analysis in overdoing it and overthinking it and talking to too many teams? I, it happens. Um, but, um, w-what I wanted to say, um, to kind of end on a positive note is that, um, you know, the, the SPACs, um, you know, asset class or industry, uh, g- go through cycles. Um, obviously we went through a boom and bust in 2023, um, and then we're slowly kind of recovering. I think we may be at an inflection point in, in the next cycle. Um, and as we get deeper into the cycle, obviously more transactions happen. Um, companies, um, actually know what a SPAC is. Most companies do. Um, they're more, um, educated, m- more prepared. Um, they understand the valuation games, they understand the process, they, they understand the, the capital that is needed and how to raise it. Um, and, and so, um, and also it's im- many of them, obviously they have to run the business. They cannot really be involved in too long processes, so they understand that they cannot sort of be, you know, overly picky and, and kind of go through this SPAC 'cause because ultimately that leads to excessive valuations, which is what happened in the prior cycle. It eventually hurts them. Um- Mm-hmm … you don't wanna see your stock kind of getting hit immediately after the close, and it's, you know, puts you- Yes … in a very difficult position to, to raise capital. So, um, as we kind of get deeper into the cycle and we see more and more mature companies, companies that are ready to be public, um, I think, you know, SPACs become more mainstream. Um, I think that, that helps the execution. Um, and you see it. You see it in the figures. I mean, you see the average time between, um, IPO, um, and announcing of a deal and, and, and announcing the deal and closing shrinking. And, and so that, and that- Yeah … usually helps. Yeah. It absolutely does. And interestingly, um, you're, you're seeing that the valuation size has actually gone down despite inflation having gone up. Mm. We're seeing valuation size coming down. SPAC teams are being more disciplined and, and the, uh, the companies are being more agreeable so that they can actually get better quality deals done. So guys, I'm so thankful. Patrick, Dimitre, Brookline Capital, you guys are remarkable at what you do. I'm truly thankful for each of you personally and professionally. Uh, it was so great getting to see your smiling faces at the, uh, at the SPAC conference a couple of weeks ago. And so everyone, if you haven't connected with these guys on LinkedIn, please do so. If you're looking at doing a DESPAC and you need some advisors who you can trust to just be in your corner and advocate for you, uh, they're, they're just a remarkable duo to have along with you. And with that, guys, blessings. Appreciate you. Again, this is Chaz, your host of the DESPAC