When Should IR Enter the DESPAC Process? The Answer Most CEOs Miss

Chaz Churchwell: What's going on everybody? My name is Chaz with the D SPAC podcast. I am here with Jordan Darrow, with Darrow Ir here's what I'm gonna tell you about Jordan to introduce him. He and I were at a conference in Beverly Hills several years ago when we got to really sit down and connect and and we found ourselves alone in a room with a bottle of very expensive tequila.

And we started sipping on that and just. Ended up having some conversation about a frustration of finding people of great integrity in the capital markets ecosystem. And it was then that I actually just really fell in love with Jordan as a man and as a service provider in the capital markets because there's not a lot of people in the public markets that have great integrity.

But I wanna let you know. Jordan is one of those people and I value him. And whenever he's talking, I promise you want to be listening. Jordan, thanks so much for being here today. 

Jordan Darrow: My pleasure to be here, Chaz. And yeah, it was great getting to know you initially. And then from there we, we built out a strong relationship and have shed a lot of ideas and concepts and everything's been going great between us, so I appreciate the friendship and the the business partnership.

Chaz Churchwell: Likewise my friend. Likewise. Okay, we're talking about private companies considering going public, doing it through the D SPAC process. How soon should a private company that's gonna go through a D SPAC be collaborating with the SPAC team to engage ir? 

Jordan Darrow: Okay, so that's a. That's a question that everyone's gonna have a different response to.

I think from and then you have the founder's perspective. You have the management team's perspective that the on the go forward basis, and then you're gonna have the bankers and the sponsors of the spac, whoever it might be, looking to acquire a private company. They're all gonna have different views on it, and it's usually self-serving.

Everyone's looking out for themselves. What I look at what our firm looks at is how the company should set itself up so that once it's the publicly traded entity, it can handle itself and maximize its valuation and have a nice fluid trading environment that gives fair valuation to its shares from the point of that it's merged and dispatched and going forward.

So from that perspective, you want to have an IR firm. Not two months before you go public or before the the merger takes place, or the d SPAC takes place, but probably six months before that because it's gonna take that length of time to really get to understand the company and its industry and its management team.

The go forward management team again, there's gonna be a lot of changes going on. We've represented a number of SPAC companies. We've represented the SPAC side sponsor in helping them identify companies to purchase as well as we've represented the companies that were being acquired. One of which was Bridger Aerospace which is public today now, and we still represented.

It went pub, it went it was acquired in a SPAC situation. And we were friendly with the CFO of the company. So he brought us in before they. Before they merged and became public, 

Chaz Churchwell: do you believe that you should be engaged before the S four even gets dropped? 

Jordan Darrow: Again, if you asked me that question two years ago, I would say it doesn't really matter all that much.

But the s SEC's been slowing up a bit. Their people are taxed a lot and the. And the SPAC market itself has gone through quite a cycle over the last, three, three years or so, it went through a boom period, then a bust period, and now it's roaring again. So you can expect that as understaffed as the SEC is whenever they you have that you're filing, it's gonna take a while for it to get through.

That could add on an extra month or two months. Before or after, I would say you might want to have them on beforehand. Let them review some of the things that, that are in there. And if you have a good IR counsel, they'll be able to look at SEC filings, not from a legal perspective, but just from an investor perspective, reviewing the document to see are we providing information in this document that's gonna be helpful to investors.

Chaz Churchwell: So when you say IR council, I don't want to be assumptive that everybody else that's here gets what you mean by that. But what do you mean whenever you say the phrase IR council, 

Jordan Darrow: IR council refers to the Office of Investor relations. And that can mean your external partner. And that's my firm.

Like we're always external. We are never internal. All of my people and we have over 10 people at the firm. We've all spent time internally at publicly traded companies in an IR capacity. Now some companies may have someone that serves it. You might have a privately held company that has shareholders.

They're not public shareholders, they're private shareholders. So they may have had someone internal that's been dealing with all of their shareholders and serving in some kind of investor relations capacity, and maybe they get appointed to the head of the IR office for the company when it's going public.

So e even that person should be involved in this whole process of taking the company public, whether it's through a direct listing, a traditional IPO or a d spac. So it's, who you want involved in ir, investor relations. IR counsel is whoever's advising you on the best way to position your company with your shareholders, whether it's private shareholders or public shareholders.

Chaz Churchwell: So what does that look like? What does IR do you like, you come in and you say it's investor relations, which sounds like you're communicating with the investors on behalf of the company, but, and what capacity, like how does that happen? What are you doing other than. Just press releases that are going out that that maybe the CEO thinks I could just put it into chat GPT and spit it out myself.

What's, what is it that IR really brings to the table? 

Jordan Darrow: Okay, so this may be one of those three part questions that we've talked about, Chaz. Got it. Number one, message development and positioning. So you may be in an industry where there's 10 different companies that compete with you. So before I even bring that message out to any investor, we're gonna talk about how we want to be positioned amongst our peer group, amongst our competitors.

There's talk of SpaceX going public next year. Yeah. There's gonna be other companies that are putting rockets. In the space or to have payloads that are going up there or in, in a satellite business whether it's Leo satellites or otherwise, you're gonna have a whole faction of companies that you're gonna compete with in some way or another.

So it's how do we wanna be seen? How do we wanna be viewed, how do we wanna be valued? That's coming to, that determination is probably gonna be 50% of what we do with the management team is working on all the content and how we're gonna. Have that content. Face the investor investment community.

And don't forget that because we're in a social media razed environment that anything we put out there for investor purposes is gonna be seen by your competitors, by your customers, by your supply chain partners, and so on. So again, we wanna protect everything about the company. Build up the management team and their credibility.

So there's all this aspect about how we position it, how we talk about it, the content that we're gonna put into all of our communications. That's one aspect of it. The second aspect of what investor relations does and how it's important and vital to a company that's going through a, a public process is who you take the message to.

So now that's knowing the investment community. Do you intend to market the stock to retail investors? Do you go to institutional investors? What type of institutional investors are you? A small cap, mid cap, large cap. There are many different ways to reach these audiences. Should we go to conferences?

Should we do road shows? Can it be virtual roadshows, should be in-person road shows. 

Which conferences do we go to? How do we get into these conferences? Do we want to present? In a public format, do we wanna do podcasts? Do we wanna speak to influencers? Investor influencers, people who are, don't have a lot of money invested, but when they say something, they have a big following.

Should we talk to Jim Cramer on CNBC or not? And if we do, when, so these are. The outwardly facing things. When we do a market outreach, there's both missionary and maintenance aspects to that. So maintenance is when you already have someone who's invested in the stock, who knows the sector well, who knows your company.

Maybe they're not invested in you, but they know it well. How do you maintain that relationship? How do you influence them going forward? Then there's the missionary people don't know you. We get, gotta bring new faces in. When you go public. Take that SpaceX as an example. Chances are that's gonna be widely covered by the media and it's gonna be heavily institutionalized in terms of its ownership.

The little guy, the retail investor, they should probably avoid such a thing because you know it's gonna be fully valued when it goes public and the little guy won't have the advantage of information flow that the institutional shareholder might have and the access that they'll have. So for those larger cap companies, that's where they'll have number one, an internal IR person as opposed to using an external gun for hire, like an investor relations firm like ours.

They'll have internal ir and they're gonna be probably more institutionalized than anything else when you have the smaller company. Let's say a company that's got a hundred million dollars in revenue, great little business, 10% net margin 15, 20% EBITDA margin, and they realize that the next phase of their growth is gonna be a little more capital intensive than the first phase, and they can't generate enough cash for that.

So they need to access, public markets to to raise some capital. How do they do that? Maybe they'll go through a SPAC process. Why? Because they need to act quickly and spacing is gonna be the fastest way for them to go public and to get quick access to that money. But when they do go public with a hundred million dollars in revenue, unless they're story stock, chances are their market capitalization and the investor audience that's applicable to that type of company is gonna be in the small cap space.

And that's, we play generally speaking. 

Chaz Churchwell: So let's I want to jump back to something that you talked about. You were talking about do we get like a celebrity endorsement, stuff like that. So whenever I think of, and you were like, do we get on Kramer? So how do you differentiate, how do these private companies differentiate between IR and pr?

Jordan Darrow: PR is. Public relations and IRS is investor relations. There is some overlap usually within the financial PR side of things, but PR also can be a product PR, where you're representing a product. One of, there could be a consumer packaged good company that has 500 products and they might have a PR firm that helps them on one of their product lines.

It could be just one type of soup. Even though you're within a portfolio, a company that has a portfolio of 50 different soups you might be working on just one of those soup lines. That's product pr. Then you could be, say, you could be like Walt Disney Company and you could have a PR for one of the movies that's being produced by your movie house, 

Chaz Churchwell: right?

Jordan Darrow: So there's divisional pr, there's product pr, there's EE even a, a semiconductor company. They could have different. Semiconductors in each one might have their own PR division or PR budget. So if you now, then there's companies that just want PR for the entire entity. So maybe that's where you're going with your question.

Chaz Churchwell: And I think that's really where I'm at. I'm like, I'm trying to distinguish like if a company's A D, spac, they're going public and they wanna make sure that they're putting their best foot forward for their company to make sure that they thrive as opposed to crumble under. Like by making sure that there's great brand awareness, good communication is is there a place to where.

You guys fill in the gaps, or should they consider getting somebody else to help them with some PR separately from having ir? 

Jordan Darrow: Yeah, if they're looking for PR that's supposed to promote the company within their own industry, go with pr. If you're solely looking at PR as a function of elevating your market awareness for your stock and to promote shareholder value.

Using our investor relations firm that has PR tentacles, so more like the financial PR within the IR firm. So as an example of that, our firm has a full fledged digital media and social media department. That's all they do is work on companies to help them get their message out using social media applications.

Chaz Churchwell: That's huge. 

Jordan Darrow: So I, we may be the only firm that does that has, that's solely centered on that. We're not, there are other firms out there that, that started out as a PR firm and then they started an IR firm. And you have to understand that those two worlds are different. When you're dealing with pr, you're deal usually dealing with product managers or marketing people.

The marketing division, the head of marketing of a public traded company might have a specific mandate. It's usually to drive. Interest in their product lines. What we are here to do on the IR side is drive interest in the stock. We're selling paper, we're selling, the stock of the company.

So that's what we're here to represent. So when we are dealing with the, the investment community, what we wanna get them into is the stock. And we, and they want exposure to the CEO and the CFO. That's often high amongst their checklists is, did I speak with someone in the C-suite?

And if I'm external ir, I am not in the C-suite. So they may listen to me to get educated on the company, to become aware of the company and to ask, certain questions about it. But ultimately they wanna speak to the decision maker. There's the jockey and the horse, so to speak. They wanna speak with the jockey.

Chaz Churchwell: I 

Jordan Darrow: appreciate that, that's what investor relations is all about. It. It's dealing with the C-suite, CEO, and C ffo specifically, and the public. Now we have dotted line reports to other areas like PR and marketing and so on, but ultimately we report to the CEO and the CFO where PR typically reports to head of marketing.

Chaz Churchwell: So let's talk about, you mentioned the CFO or like the C-E-O-C-F-O-A few times there. How do you find that the CEO's ego can change a communication paradigm? 

Jordan Darrow: I gotta tell you, I love CEOs with big egos. 

Chaz Churchwell: Okay. 

Jordan Darrow: It is hard enough. Tell me 

Chaz Churchwell: about 

Jordan Darrow: it. The company on the private side. When you add in public shareholders where you're measured every single day by your stock price, how much it trades, what's the valuation, what was the change in the price itself that adds on at least 20% or more to your daily workload?

You need a big ego to, to handle all of this. There's a lot that goes into running a business. You're adding in a lot more to them. So I need a big ego. That's how you're gonna get known. Now, how you manage your ego is a whole different story, and sometimes that, that creates challenges. But I prefer to have a big ego running a company than someone who's meek and meager and doesn't really want to get out there and ride herd on the investment community.

You have to remember the, as much as there is a lot of smart people on the investment community side, they're often invested in 10 to a hundred different companies. There's no way they could note all of those effectively, but they have a lot of money invested in these companies, right? So they're coming and putting a lot of money in.

They have different expectations than you do as the management team. You can't let them push you around and say, I have other companies that are doing well. Why aren't you doing well? You have to stand up for yourself. You have to let that ego say, listen, our stock might not be doing right now.

Maybe our company's not performing right now, but we've got a plan. Here's what we're going to do, and you have to be convincing with that. So you either have to be really smart or really have a big ego, and hopefully they have both, 

Chaz Churchwell: hopefully. I like that. I like that answer. So I. What do you think there has been there's been this influx of spac an increase in SPAC activity that's really blossomed this year.

What do you think is, has it been good for the market? Do you do you think that the SPAC increase in in number of deals that are out there circulating around. Is is gonna be good for the public capital markets? What are your thoughts there? 

Jordan Darrow: I think it's great that there are an increasing number of SPAC IPOs.

What I'm really pleased with is the quality of these IPOs have improved tremendously from, 

Chaz Churchwell: yeah, 

Jordan Darrow: 2020, from 19. It picked up considerably, the number of SPAC IPOs. 20. And then from into 20 it went ballistic. But the problem was you didn't have meaningful maturity in the marketplace itself. They didn't know how to source companies well, and you wound up having three or four companies in the same industry going public through the SPAC process, like the, the specs were created and then they jump on a hot ticket like lidar.

Electric vehicles and you had all these companies going public at the same time, and they're not all going to be successful. And most of these companies were very immature in the development of their product, let alone having success commercially. A lot of these were technology companies where they didn't have commercial success.

They didn't even have a product that was fully vetted. And they were going public on huge valuations through the DPAC process. You'd look at them, say they had a billion dollar valuation, yet they weren't even commercially viable. Then once they get a commercial product, when they're trying to ramp up and scale, they either had problems on the sell side or as they were getting contracts, they couldn't fulfill the contracts.

So they had growth, various growing problems, growth problem. What we're seeing now is that so many more companies are going public through the SPAC process where they're much more mature companies. 

Chaz Churchwell: Yeah, 

Jordan Darrow: they're fully run. The only thing difference between before and after is two things.

Number one, they have a lot more capital now, and number two, they're public, so you need. You now need a new segment of your company. Remember, I, as I mentioned earlier during our podcast talk here that any CO that goes public add 20% to your time bandwidth to toward investor relations activities.

So you're gonna have this new function now. You're gonna have the cash at least to hire someone internally or go externally to hire an IR firm to assist you. There's a public company costs along with that, such as, audit and legal and trading fees, listing fees and ongoing listing fees.

So there's all these various costs that are involved. So you, but hopefully. You are, you're merging with a SPAC that has a reasonable amount of capital, and then because you're be public post merger, you now have greater access to capital on an expedited basis than as you would if you were to try to do it privately held.

Chaz Churchwell: So let's talk real quick about you just triggered something, you said hopefully you're doing a deal. With a SPAC that has some capital. What do you mean by that?

Jordan Darrow: Okay, so 

Chaz Churchwell: let's go there 

Jordan Darrow: again. Yeah. Going back to 2020, a lot of companies going public via with a, with a SPAC business model.

So you had all these SPAC companies and didn't, they didn't have an operating company. They're searching for an operating company. Then they find an operating company, and the operating company says, Hey, I need a hundred million dollars. So the SPAC says, okay, fine. We'll do a pipe transaction that's a private investment in a public entity.

We'll do a pipe transaction to bring in this money, and then we'll get shareholder approval to buy you to merge with you. And two things can happen in there. Number one, you don't raise all the money you wanted to on that pipe transaction number two. You've raised the money, you're going through your shareholder approval process to get the shareholders to approve the merger or the purchase of this non-public company.

And the operating company and shareholders do not approve it. You had roughly a year to two years depending on the particulars of H spac, but generally speaking it's from one to two years, you have to find. And if you don't find that company to merge with, you have to return the capital that you've raised to your shareholders.

Chaz Churchwell: Yep.

Jordan Darrow: In 2021, this was not happening. The SEC was cracking down. A lot of these businesses that had already merged were failing, and that's what led to the SEC crackdown. They were failing because they weren't commercially viable. The stocks that had these huge valuations were capitulating, people were losing money.

When people lose money, the SSC reacts to that. So now they're crashing down on all these SPAC issuances initially, and the market dried up. So there was no, no money to go around. Even if shareholders approved the merger, they didn't raise sufficient money in the hype market, and therefore the merged entity didn't have the requisite capital.

We represented a couple of companies that went through that process and they were struggling, and they hired us to help them because they realized they weren't gonna get the money they thought they were gonna get through the SPAC process or the DS spec process. There's ways that even if you went through the process the proper way, you weren't going to wind up with a cap you thought you need.

Are you hearing the dog in the background? I 

Chaz Churchwell: don't hear any noise in the background. 

Jordan Darrow: Okay. My dog's barking. The mailman? 

Chaz Churchwell: No, we're your mic's doing a good job at filtering it out. No worries. 

Jordan Darrow: Okay, 

Chaz Churchwell: So let me ask you this because I, 'cause I actually didn't know where you were gonna go when you were talking about the capital markets component because.

Or not the capital markets, but having capital with the spac. Because obviously there's two different things that are there. There's the operating capital that a SPAC has to actually be able to fund itself through the end of the deal, or does the SPAC run outta money and then become codependent on the private company to actually fund everything on the backside and then, 

Jordan Darrow: yeah.

The way it's working now that I've seen the SPACs don't really run out of money. The sponsors who are running the spac? The sponsors are the management team of the spac. And they're one and the same in many cases, 

Chaz Churchwell: right? 

Jordan Darrow: They're paying themselves to find the companies. They're keeping the lights on, paying rent through the money that they raised at the spac, and oftentimes they have three or four different SPACs going on at once in different phases of development.

So they're getting four management fee. If they have four SPACs going on they have four management fees. Coming in. Yeah. It, it takes very little. You could work outta your home office and have oh, no overhead until you, you create the SPAC and fund and bring it public. So you might need very little operating capital to get there.

Once you are a publicly traded spac, now you have all this capital sitting there waiting to be used towards making an acquisition. And you're just feeding off of that, paying yourself your fee. So you're okay even if you have to return capital. It doesn't matter if you can't find, the 18 months to two years goes by and you can't find that acquisition that you wanna make or the ones that shareholders will approve and you have to return the money to, to you returning whatever's left over.

Chaz Churchwell: Right? 

Jordan Darrow: So it's not like you're paying do, if they had to pay dollar for dollar back to everyone, it wouldn't happen. That's why it's 

Chaz Churchwell: called at risk capital. 

Jordan Darrow: Yeah. So the bankers get paid their 8% for raising the money. The sponsors get paid because they're taking a fee as part of the management team usually.

They're just, so again, it's like it's like being on the board of a public company for people that are over there. There are individuals who just get on public boards and that's how they make a living. They don't actually have a full-time day job. They just sit on boards and take, 40,000 or a hundred thousand dollars cash via a year, plus some stock and some expenses to travel to board meetings, and that's their livelihood.

And for many of these SPAC companies, there's management teams who have multiple SPACs going out and they could do a great job, but they're being paid to get there. And they're and hopefully they're really good at finding these high quality companies and building out a very nice board. Once you have this des spec process yeah.

So we're se again, we're seeing a lot of good quality companies come out. So the specs that are out there, they're doing a nice job. The SPAC teams that they're doing a nice job of vetting companies, sourcing companies ha having various consultants help them find good companies, and then bringing these companies into the public marketplace in an expedited fashion and availing them of the capital that they need.

So we're seeing a lot of good I, the, the Trump recent merger, Trump media company just went, but they went public through a SPAC process. And then now this week they announced that they're buying a fusion energy company to help build a data center for them and power data center for them so that they're media empire.

Has the energy it needs as we're going into a period where there's a lot of data centered build outs for AI and so on. Yeah. People are concerned with having energy to run the data centers, to keep everyone electronically and digitally connected so that's their push. But now they're get, they're so well funded now.

So it's go, we've gone from where you are running a lean SPAC business, but you're utilizing cash from. SPAC shareholders to fi financing the acquisition, to financing the company you've acquired to then going on to the next stage of growth, which is where, that the Trump Media company is now finding itself.

They're now gone going onto to new things. So the, they're gonna have multiple revenue streams. 

Chaz Churchwell: So let's talk about, you mentioned Trump, so let's go there for a moment. Let's talk about how you have seen the market and the story that you tell as an IR professional. How has your story change whenever, like now that we have this new administration, we've got Paul that's there instead of Gensler.

How's the story changed and the narrative changed in the world of IR for these public companies? 

Jordan Darrow: So really we're administration agnostic unless there's some meaningful regulatory issues. As an example of that is there were a lot of SPACs that went public. In the 2020 timeframe that we're connected to the EV space.

Yeah. And and even right before then, the Biden administration was a very pro electric vehicle from a legislation standpoint as well as just. Subsidies. So they made it, tax advantageous to buy an electric vehicle. So these things that are taking place are obviously gonna affect everyone that's in the EV space and the related supply chain.

In the absence of that, which is what you have right now, you're seeing a lot of EV companies fail or a lot of large companies like Ford Reversing course on its EV strategy. And 

Chaz Churchwell: Volkswagen, I don't know if you saw that Volkswagen's actually shifting. 

Jordan Darrow: Yeah. Every, the only one I haven't seen shifting is Toyota's still, but they're a great company.

We don't represent them but they make a great vehicle. And and they seem to be, just be moving ahead. The Chinese landscape for electric vehicles is phenomenal right now. They're doing great. The us EV companies are having a hard time. Legisl, that's a legislative issue if you're just talking about general, like who's in office and it's what's the interest rate.

Now we're more, the stock market is interest rate sensitive, so that's really has more influence on us. That, that comes down to not whether you're a SPAC or not, but it's general ir and that's the daily blocking and tackling and what's the investment community like, and what are they favoring right now?

W. Small caps have been out of favor for since 2019. And and again, that's who we deal with generally speaking. That's not to say we, we don't have some standout stocks. We do, we have some really terrific standout stocks, but it's a story stock environment, and a lot of money has gone into passive investing investment strategies like ETFs, out of active investment strategies, not to be confused with activist investing.

Which there's a great market for that. I enjoy activist investing because they wanna see the stocks and the companies perform better. But active investing is people who look for companies with good fundamentals, who have good strategies, who are deploying capital properly, raising capital when they should, buying back shares, when they should, and so on.

If they're operating well, their stock should perform well, hopefully, and we should have fundamental investors that go after those stocks and invest in them and build positions in them over time. Right now we're seeing interest rates that are not go, they're not following the mortgage rates, aren't following interest rates.

Normally it does, but lately it hasn't. Interest rates have gone down. Mortgage rates are staying where they are, if not increasing over the last, six months or so. Investors are looking to put money to work. So are they gonna go into fixed income product? Are they gonna go into equity product?

And as I said earlier on our podcast, we're selling paper. That's all you get when you buy us. There's not necessarily any return on that. You're not getting an interest rate or dividend or necessarily, especially for small caps, a few small caps, pay dividend. So all you're getting is the hope of higher equity value values down the road, and we're seeking out investors like that for the cups that we represent.

And it's, we like an interest rate light environment because it makes fixed income products less attractive. 

Chaz Churchwell: Yeah, 

Jordan Darrow: so you know, my hope is that interest rates go down further and more cash will cycle out of fixed income into equities. And within the equities. I'm hoping that there's a cycle out of the large cap, like the NASDAQ 100, which is dominating every index.

Those, the NASDAQ 100 composite companies, they're in multiple different indexes and they're dominating each one of those index, whether it's the Russell Russell Indexes or Vanguards you look at most of these are. Market cap weighted indexes where money's going into maybe top 30, 40 names, and it makes it look like the market's on the rise, like the Dow and the s and p 500, those are hitting new heights, but the smaller companies are being neglected and there's gonna be.

While there's, a greater selectivity process going on for SPACs, or we're seeing higher quality companies go out, there's a lot of smaller companies that are well run and they need access to capital. And going public, the traditional route is very challenging for them. So it could be that the SPAC route is just right for them, and hopefully they, they're found and appreciated.

Chaz Churchwell: It. It's interesting you say that because I actually have multiple companies right now that they were planning on an IPO. They were on an IPO path. I even have one that has cleared SEC comments that was set to do an IPO. But now because of the banker and the feedback they're getting from their banker, they're looking at pivoting into a spac.

It's, we've got multiple companies that were on IPO paths that are now pivoting and moving to pursue a SPAC as the go forward option to be a public vehicle for them. Yeah, 

Jordan Darrow: spac, it's a great way to go. It's an accelerated path to go public. You have to have that mindset where you want to go public, where you have the management team to do it, but it accelerates your options once you get there.

Again, there's gonna, depending on if you're gonna be one of these mega. Unicorns that are going public. In the last few years we've had some very large, sizable, well-known brand name tech companies that went public through either SPAC or Direct Listing. 

Chaz Churchwell: Yeah. 

Jordan Darrow: Direct listing is when you don't need money.

People just want exits. That's where existing shareholders want to get out. That's when you, that's when you just go the delisting route. The direct listing route. But if you need money, you're gonna go public to the traditional route, but that takes time and market timing. Or you might have to access the SPAC market.

And thankfully there's a lot more SPACs gearing up right now raising capital to do to fund these to acquire and then fund these companies so that they can, for further expand their businesses. 

Chaz Churchwell: Yeah. Okay, let me ask you this. What would you say. Is the biggest hurdles that you have to contend with doing what you do when you have a company that is.

Private looking to go public, and they may do it through a SPAC vehicle, maybe they do it another way. But what is the big hurdle that you have the CEO and the leadership team that they seem to somehow be resistant to ir or maybe they're they're just not seeing. And understanding the value to it, or maybe it's that they just don't want to fall in line with what you know to be good hygiene for being a public company.

What are a couple of the key takeaways that just that you want these private companies listening and watching to be able to say, guys, look. These are your biggies. These are your things that you really are, you've gotta do. And I know that you're not gonna want to and the, or maybe it's the things we get kicked back on.

Could you throw some of those at me? Yeah. And to your listeners, 

Jordan Darrow: the most important thing is understanding how the capital markets work for public traded companies, you have to understand that good investor relations is gonna contribute 10 to 20% of your valuation on the upside and downside.

So for an example of that, if the market is going down. Most likely your stock is gonna go down with it. However, do you go down 10% or do you go down 30% Good. IR reduces the downside. Good. IR also enhances the upside. Think about what you're paying for that. So once you understand that concept of what does it actually do, then you have to find out what's my ROI on that?

Why do I need someone to do that for me? And does it make sense to do it from an economic standpoint? If you are a $25 million revenue company and you hire a new salesperson, they generate $500,000 in sales for you and you gotta pay 'em $250,000 all in. And what does that mean to the bottom line?

And what does that mean to your share price? Are you going to, with that new salesperson, are you going to move your valuation any higher? As I mentioned earlier, IR can contribute 10% to, or downside if you, if that same company that has 25 million in sales or so has a $50 million market cap, and I can move that stock five or 10% higher or keep it from losing that much valuation.

I've just helped you re maintain. If it's a 10% move down and you only move down 5%, if it's 50 million mark, 50 million market cap, maybe you're only going down two and a half million dollars in market value, what did you spend on me for the year? Couple hundred thousand. So I'm generating or creating, or maintaining two and a half million dollars of market value.

What does that new salesperson give you? So again, it's that contribution of what you're gonna add to the valuation or preserve. Preserve a shareholder value is important too. If you look at a lot of buy-side funds, what their mandate is, preserving capital. You don't wanna lose capital. A public company doesn't wanna lose market cap, shouldn't wanna lose market cap.

Yeah, in down in the downside, you wanna lose as little you will lose. You wanna lose as little as possible so that when you're on the upswing, whether it's the market or your business cycle is on the upswing, you're able to capitalize on that as well. And you're starting from a higher point in getting higher.

All the while. Yes, you're paying in investor relations for that. It's a minimal spend for a high return. 

Chaz Churchwell: I you know what I would actually add to that because you talked about the monetary side of it, but I want to go to something that you spoke to earlier, which is the time side. Oh yeah. 'cause here's the reality.

Even while you and I have been recording, my phone went off with one of the CEOs of a client, we have. And they're like, our stock is crumbling today and my phone is blowing up with investors wanting to know what's going on. So if a stock starts crumbling, then how much time are they having to spend on the phone with investors trying to settle them and calm their nerves whenever, if they had you.

Then all of a sudden that's less time on the phone with investors because they have you. 

Jordan Darrow: And going back to what I said earlier about missionary maintenance, so right now that's maintenance. He's maintaining those people. But all those maintenance, your IR council, whether it's internal or external, should be handling 90% of those calls.

10% of those calls are gonna be the larger shareholders, your key analysts. Those let the CEO take where he's got the direct personal relationship, everyone else. You push to us, and if we're good at what we do, we can manage that relationship, manage their position in the stock. 

And we'll help the stock, and we'll help weather that storm.

So time management, whether it's dealing with days like this or handling quarterly reporting cycles, that's what you want the near to do, effectively handle it. Maximize your opportunities when you have them. It's not just about holding a quarterly earnings call, which is what? Most companies have to do if you're based in the us, if you're European, you do half year and full year calls.

If you're American, you're gonna do quarterly calls. There's a lot of time consumption there in handling that whole cycle process. At 

Chaz Churchwell: least for now. 

Jordan Darrow: Yeah. 

Chaz Churchwell: At least for now. They may be moving to the half year, but 

Jordan Darrow: I, it'd be nice. But when you have to do that quarterly cycle and you put all that time and effort into.

Creating scripts and other collateral material for the public consumption. And then you hold the earnings call and nobody's on it, or no one asks questions and it looks like nobody cares and there's no interest in your company, then what's it worth? What's it all for? 

Chaz Churchwell: Yeah. 

Jordan Darrow: Again, good IR council should be developing missionary maintenance strategies to create interest in the stock, to keep people in the stock, to keep more people in the stock, and replenishing the shareholder pipeline.

That's what we do, and that's what companies have to be prepared to do, and that's what you're paying them to do. Handle the stuff that you know, that 20% of the time that they're gonna have to devote to it. It could be a lot more in, in challenging times, have someone around to help you with that. 

Chaz Churchwell: So I appreciate that, man.

Let me ask you I wanna ask you one question. It's double-sided. There's a business component to it, and then after that I want to talk about the personal side of it. So you live in Austin, Texas, and you have been part of a. Call it a mass exodus from New York. And there's been really out of the northeast and even from California, there's been this mass exodus over the past probably seven years, but it's really starting to hit a crescendo to where people are just moving into the southern states, Florida, Texas, things like that.

How do you see that's changing Wall Street? Number one, and then I'll come back and ask a personal follow on after you address that. That's directly connected. 

Jordan Darrow: I see it making everyone's lives easier. Number one, a lot of us don't have to go to the office anymore. When I came here before the mass exodus that was initially that was accelerated by the pandemic.

I came here just before that, a few years before that. But when the pandemic hit a lot of people, a lot of people in New York went to Florida, people were leaving, going to no income tax states like Florida, Tennessee Texas a lot of companies from California relocated their headquarters to Texas.

Again, trying to make life more affordable. It's nice to be in the middle of the country. Where, so you don't have these long coast to coast trips. But for the capital markets, probably the best thing that's come about is that there's no need to have a physical IPO roadshow anymore. During the pandemic, it was all virtual.

Now we've gone back to a hybrid, some virtual, some physical, but it proved to everyone that you didn't need to have a physical roadshow that takes one to two weeks where you're doing the, the dog and pony act, going to city by city, running around to offices, and meeting with institutional investors and bankers and so on.

So it's made it a lot easier. And now we have new pockets of money. You go down to South Florida, there's a tremendous amount of money now that down there, institutional and retail. So it's just adding to where you want to go. Dallas now has a stock market there, brand new. So they announced that and overnight NASDAQ and New York Stock Exchange announced that they've got all representation there as well, in state of Texas.

It's nice to see, the spreading out of wealth. New York doesn't have to be the hub. It still is the hub. It still is, is a major hub, but there's now other concentrations that are important. 

Chaz Churchwell: Yeah. And I will tell you that, you're in Austin, I'm in Dallas, and there is a lot that is happening here in the Texas.

Public markets ecosystem that is that's starting to gain a lot of traction. It's really interesting. But that's obviously a conversation for another day. But as I flip over to the personal side of things, man, you moved down and I know you didn't say why you moved to Texas, but for those that are listening, it's 'cause he is an awesome dad and just he's very driven by family and he's got.

Two two daughters that both got into the University of Texas, which it's not an Ivy League school, but by golly the acceptance rate is pretty close to Ivy League. So I know that you're pretty proud of that. And so you ended up moving down to Austin because you love your family so much and you wanted to keep it together.

Bragging on you for that part a little bit. I want to find out from you as a New Yorker that has moved to Texas, I have to ask you a very complex and powerful question. Brisket or New York style pizza, 

Jordan Darrow: New York style pizza. 

Chaz Churchwell: Oh wow, that's that's deep. That's deep. And then, yeah. Okay. 

Jordan Darrow: Because I couldn't eat brisket every single day, but I could eat pizza every day.

Chaz Churchwell: Got it. But what have you 

Jordan Darrow: applied a good New York style pizza? I can't eat Austin Pizza every day. 

Chaz Churchwell: That's fair. 

Jordan Darrow: It's just not good enough. 

Chaz Churchwell: That's 

Jordan Darrow: Are 

Chaz Churchwell: better. You gotta 

Jordan Darrow: go raise are 

Chaz Churchwell: better kind of 

Jordan Darrow: thing. If you said Texas pizza versus central Texas barbecue. But if it's New York pizza versus barbecue, central Texas barbecue, I'm going with New York Pizza.

Chaz Churchwell: That's interesting. Okay. I appreciate that. See? 'cause for me, I think about brisket being like, I can have brisket on a baked potato or brisket sandwich, just brisket, plate it up. I can do brisket, nachos, brisket, chili. So I just think of the versatility of it. I'm like, what do you mean you can't eat brisket every day?

I can eat brisket every day. Like just in different ways, but I love it, man. 

Jordan Darrow: I suppose I could eat it every day. I don't think my doctor would like that very 

Chaz Churchwell: much. I don't think he wants us eating pizza every day either but fair enough. Hey, Jordan, I'm so thankful that you came on with Darrow ir to talk to us today.

Everybody, if you haven't already done so, please hit the subscribe button. Go ahead, visit us at. The D SPAC podcast.com hit our mailing list. There's a ton of great things that are coming. I'll let you know if you want to connect with Jordan. You can find him on LinkedIn. I'm sure that he would love you to stalk him and connect with him there.

Alternatively, you can reach out to us. We'd be happy to make an introduction. Everyone, thank you so much for watching the D SPAC podcast.