December 2021

Five Lessons from Successful de-SPACs

This article by Gladstone Place Partners was originally published on

By Danielle Fornabaio

The special purpose acquisition company (SPAC) market has come back to life after a series of issues slowed the market for new deals, ranging from a sheer glut of transactions to SEC accounting changes that required restatements and an overloaded private investment in public equity (PIPE) market. 

But it looks different than it did in 2020 and early 2021, when flying taxis and spaceships were getting financed. Now, the market is more sophisticated and discerning and the PIPE market is tougher, significantly impacting which de-SPAC-ed deals are successful.

Some of the recent successes – Skillsoft, Lucid, and WeWork – are companies with established business plans and long-term committed investors. These de-SPAC-ed companies are tied to post-pandemic tailwinds, ESG fervor, conscious-driven brands and resilient consumer trends. Such themes will continue to play a role as other recently announced SPAC mergers, like Waldencast’s combination with popular skincare brand Obagi, and Gen-Z focused Milk Makeup, move toward close.  

From our work in the capital markets, Gladstone Place Partners sees five key lessons to successfully navigating the de-SPAC process.

1. Amplify strong narratives

Companies in de-SPAC mode need a great, believable narrative to highlight how their growth fits into the broader business landscape.

Edtech is one example. Skillsoft had a strong business transformation story to tell and benefitted from market tailwinds as more organizations embraced the importance of digital learning during the pandemic. Churchill II combined Skillsoft with Global Knowledge to create a new leader that could tap into the massive digital learning market further encouraged by the pandemic, drive profitability, and deliver value for shareholders and customers.

This combination of an improved business plus a favorable marketplace alleviated some of the criticism that pre-revenue SPAC merger targets have faced.

2. CEO as narrator-in-chief

The strength of the company narrative will only carry you so far. Companies need a powerful narrator to convey the key messages. Nextdoor’s Sarah Friar and SoFi’s Anthony Noto were strong advocates for their companies from SPAC merger announcement through to close.

Friar appeared at Fortune’s Most Powerful Women Summit, challenging the ‘growth-at-any-cost mentality’ of other social media platforms, and on Bloomberg TV. Friar also engaged in a variety of other opportunities including Yahoo! Finance, the Financial Times and more around the close of the deal, inspiring confidence in her leadership across the media and investors alike. Noto inspired similar confidence in his leadership from CNBC’s Jim Cramer and other market commentators, leveraging a strong pipeline of business news between merger announcement and close to drive his role as the face of the company, providing updates via CNBC, Reuters, Quartz and more.

3. Build third-party support   

Another hallmark of a successful SPAC is the role of third-party investors and others in the deal and the communications materialsNot only did WeWork feature the lead SPAC sponsor and other PIPE investors in the company’s materials, but those investors were also out there sharing their support for the company, including via the media.

Prominent real estate investor Barry Sternlicht, an investor in the WeWork PIPE, was quoted in the release and appeared on broadcast around the merger announcement. His views were widely read and circulated in the media and among investors. Vivek Ranadivé, the lead SPAC sponsor, also spoke with CNBC on listing day.

Prior to closing the merger, WeWork also announced a strategic investment from Cushman & Wakefield, further voicing support for the transformed business.

4. Focus on the vote

To close a SPAC merger, the listed entity must secure a quorum of shareholders voting yes to the deal, which can be particularly challenging if a SPAC has a high percentage of retail shareholders in the stock.

It’s important for a company to understand who their holders are as of the record date and how to reach them. Because retail investors aren’t as familiar with the process as institutional investors, they may require some more focused outreach and direction.

In the case of Lucid’s merger with Churchill IV, the vote came down to the final hours – the stock was held by a significant number of retail shareholders, so they needed to turn out a high number of votes to close the deal. Effective, proactive communications, especially on social media, helped Lucid reach retail shareholders in the final hours to tell them they needed to vote and show them how, which ended up being crucial in closing the deal. 

5. Listing day as a branding event   

Companies approaching de-SPAC should treat listing day as a major branding moment and an opportunity to celebrate employees.

Lucid and WeWork both led bell-ringing ceremonies and held employee recognition celebrations to mark the moment. Lucid also showcased its cars all over New York City.

Ultimately, thoughtful, strategic communications, grounded by a strong narrative and spokesperson, help a company successfully de-SPAC and begin life as a publicly traded company on solid ground.

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