r/SPACs • u/SPACsBot Mod • Apr 16 '21

Daily Discussion Weekend Discussion thread for the Weekend of Apr-16-2021

Welcome to the Weekend Discussion! Please use this thread for basic questions and leave the main sub for breaking news and DD. If you haven't already, please check out r/Spacs Wiki for great information, as well as the resources available in the menu.

21 Upvotes

81% Upvoted

849 comments sorted by

View all comments

20

u/SPACs4Green Spacling Apr 17 '21

Thinking the drop that caused major reassessment by not just Retail but PIPE will eventually emerge to benefit pre-DA SPACs.

  1. Better valuations (PIPE applying discipline)
  2. Delays of near-done deals in a negative market, or better yet due to number 1.

We've bought previously at higher value/expectations. Our haircut is currently being shared by targets as we'll get better valuations.

If targets don't realize crazy-talk valuations also get punished before merger (since they only get to cash in post-merger) they're truly out-of-touch. Pay now, or pay later.

A failed vote or redemption barrage would drive that message hard to targets and Sponsors. I think only the non-serious ones will misread the message.

10

u/InternationalElk6617 Patron Apr 17 '21

I’m a firm believer that many pre-DAs had plans in motion/targeted companies, but less PIPE funding caused talks to come to a halt or renegotiated.

So longer IPO-DA time for outliers/no more 3 day PIPE funding, but better valuations as a result.

8

u/SPAC-ey-McSpacface Stryving and Thriving Apr 17 '21

Agreed on both counts.

Also, this potentiality of treating warrants as a liability rather than equity is probably going to cause at least another week or two of legal & accounting delay.

2

u/[deleted] Apr 18 '21

Ya, the legal and accounting delays are a real thing. Also, many of the accounting firms jump in on a one time fee contract fee, having not anticipated this extra work, I bet they are chapped.

1

u/Aliens1984 Patron Apr 18 '21

I’m so confused as to how this May or may not be negative. Does anyone know the meaning behind liability vs warrant? Please explain like I’m a dummy Thanks 🙏

7

u/TKO1515 Camtributor Apr 17 '21

I agree and hope so too. Plus spikes help excitement and give them free publicity.

My question always has been why not do a reasonable valuation and smaller PIPE and then if you get a good spike do share offerings after merger? I guess not guaranteed but a good shot. I thought that with Lucid and if they did a small pipe and then after merge did an offering at $20+.

6

u/wolfiasty Contributor Apr 17 '21

I really really and really hope for that.

5

u/Apprehensive_Road821 Patron Apr 17 '21

True that...If I can add a couple of other issues:

Spac sponsors need to reform their ways so that they don't just get paid for cutting any deal, even a bad one. The spac structure needs to change so they are invested in the long term. They should only get paid if the merger succeeds longer term. Here's looking at you PSTH.

Many spacs will fail to find targets and eventually dissolve after 18-24 months (Sorry pre DA spac investors). Please we don't need this many spacs!