Bowen Advisors

Feb 19, 2021

The company aims to raise $350 million for acquisitions, according to an SEC filing Former Hulu CEO Randy Freer is the latest media executive to join the growing crowd those getting into the investment game via a SPAC, or Special Purpose Acquisition Company. According to  an SEC filing , Freer will serve as CEO for Advancit Acquisition Group, which aims to raise $350 million for business acquisitions. In the filing, Advancit said it would “not be limited to a particular industry or geographic region in our identification and acquisition of a target company.” Former AOL CEO Jonathan Miller will serve as chairman of the board, with Advancit Capital co-founder Jason Ostheimer on board as president. The management team also includes Alex Kassan as CFO and head of corporate development, and Matt Minoff as head of business development. Freer served as Hulu’s CEO from 2017 until 2020. He  left amid a reorganization  as the streaming service was further integrating within the Disney family. SPACs, occasionally referred to as “blank check companies,” are shell companies designed to allow investors to pool capital to fund mergers or acquisitions with the intention of finding opportunities after establishing the company. They typically serve as a way for individual investors to participate in actions normally reserved for professional investment companies. According to investment experts, SPACs represent low-risk, high-reward potential for fast-growing companies to go public. “It has started to build exponentially beyond private equity, as other industries like Hollywood realized they possess reach to investors and understand how to build a storyline,” Burke Dempsey, executive vice president head of investment banking at Wedbush, recently  told TheWrap . “It’s like, if you don’t have a SPAC, where have you been? What are you going to say at your next cocktail party on Zoom?” Benson, a longtime Boston tech exec and venture capitalist, put some early money into LogMeIn, now a public software company, and worked at Lotus Development Corp., which helped to popularize e-mail and spreadsheets, in the 1980s. Since 2016, he had been working with Elon Boms, an investor in New Haven, at Launch Capital, which invested in startups on behalf of the Pritzker Vlock Family Office, descendants of the Chicago clan that created the Hyatt Hotel chain. But over the last year, Boms says, Launch Capital had decided to slow the pace at which it invests in startups. It’s not stopping entirely, but the focus is on supporting the companies already in its portfolio. That includes Minibar, which delivers booze on demand via an app, or Cake, a website which provides information on end-of-life decisions (such as how to host a Zoom funeral.) Boms says he and Benson had noticed that many companies they had backed were having trouble making the jump from private to public; they were so-called middle-market companies, not bigger startups like DoorDash or Airbnb with $1 billion or more in revenue. And acquirers seemed more interested in doing larger deals. Over the course of 2020, Boms and Benson watched the boom in SPAC activity — including DraftKings, and SPAC entities created by General Catalyst and Highland Capital Partners, two Cambridge venture capital firms. By November, they’d gotten the green light from the Pritzker family to form one of their own, shifting their focus from investing in early-stage companies to creating a public “shell” company and then finding a software or technology company to acquire. They filed paperwork with the Securities and Exchange Commission in mid-December, calling their SPAC Thimble Point Acquisition Corp. In mid-January, instead of flying around to meet with big investors — a process known as a “road show” — Boms and Benson held those meetings on Zoom. “We had 45 calls over the course of five days,” just after the holidays, Benson recalls. Because he has four dogs, he felt his master bathroom would be the quietest place to conduct those meetings; Boms was in his home office in New Haven. They began with a commitment from the Pritzker Vlock Family Office, but also raised money from PIMCO, Wellington Management, and others. They’d started with a goal of $200 million; they ended up with $276 million. Investors, Benson explains, look to SPACs to identify a fast-growing company, acquire it, and deliver a healthy return over time, better than what they could get from other assets. “They’re looking to be long-term holders” of the stock, he says. “This is the exact opposite of day traders.” Thimble Point has two years to identify a company to acquire — or else it returns the money to its investors and goes poof. Paul Bowen of Bowen Advisors, who has been following Thimble Point, says it can raise additional money once it finds a company to acquire. “They are shopping for a company that will sell for $1 billion to $1.4 billion,” explains Bowen, CEO of the mergers and acquisitions advisory firm Bowen Advisors in Boston. But if the people who have given Thimble Point what you might call its shopping allowance don’t like the company it identifies to acquire, they can ask for their money back — which in some cases can scuttle the deal. What’s the upside for Boms, Benson, and the Pritzker Vlock Family Office? As the SPAC’s creators, they own a 20 percent post-IPO stake in the company, which could be very valuable if Thimble Point acquires a great company. Bowen raises some questions about the increased SPAC activity in 2020 and 2021. For one, he notes there are about 330 public SPAC entities looking for promising acquisitions. Will that lead to price inflation when SPACs vie for the same company? Are some of the best private companies sitting out the SPAC “beauty pageant,” in Bowen’s words, hoping to go public the old-fashioned way? He predicts that “you are going to have SPACs with a timing deadline” — remember that two-year clock — “chasing lower-quality deals.” And a recent  paper  published by the Harvard Law School Forum on Corporate Governance observed that while SPACs may be a cheaper way to go public, SPAC shareholders “are bearing the cost, which is an unsustainable situation.” For individual investors, Bowen says, buying shares in a SPAC’s stock is making a bet and hoping that “maybe they will find the next DraftKings.” Amid the pandemic, “we haven’t been able to go to places like Vegas and gamble.” (That aforementioned paper looked at 47 recent SPACs; investors who own SPAC stock at the time it acquires a company see share prices drop, on average, by one-third or more.) SPACs technically are not allowed to start hunting for a company to acquire until they begin trading as a public company. For Thimble Point, that happened Feb. 2. That’s when the two-year clock started ticking, as well. Neither Boms nor Benson were in New York to watch the stock begin trading on the Nasdaq under the ticker symbol THMAU. Boms explains there was a snowstorm, and a pandemic, so “there wasn’t much to do in NYC, even if I had gone.” Instead, he switched on CBNC and kept refreshing the Nasdaq website to see the stock begin trading. Someone at Nasdaq was kind enough to send a photo of the exchange’s big digital billboard in Times Square, congratulating Thimble Point — a company without a product, revenue, or more than a handful of employees — on its public market debut. (Reuters) – Former Walt Disney Co executives Kevin Mayer and Thomas Staggs plan to raise $300 million in an initial public offering for a new special purpose acquisition company (SPAC), a person familiar with the matter said on Thursday. The duo’s first SPAC, Forest Road Acquisition Corp, agreed a three-way merger last week with fitness companies Beachbody LLC and Myx Fitness LLC that was valued at around $2.9 billion. Former basketball star Shaquille O’Neal, who is also on the board of directors at pizza chain Papa John’s International Inc, and Martin Luther King III, the oldest son of civil rights leader Martin Luther King Jr, are working for Forest Road II as a strategic advisor and a director, respectively, the source said. Mayer and Staggs will serve as co-chief executives and co-chairmen of the new SPAC, the source said. They had worked with the first Forest Road SPAC as a strategic advisor and director, respectively. The source requested anonymity ahead of a regulatory disclosure on the SPAC IPO. Mayer was Disney’s top streaming executive before he left the media giant last year to become the chief executive of popular video app TikTok. He departed the company three months after joining. Staggs worked at Disney for 26 years and held various roles including chief operating officer. SPACs are shell companies that raise funds to take a private company public. They have gained immense popularity since last year, as they allow companies to go public by eschewing traditional IPOs. A string of high-profile SPACs have been raised in the last 12 months, including by financial investors William Ackman and Barry Sternlicht, former U.S. House Speaker Paul Ryan and ex-NFL quarterback Colin Kaepernick. VIDA FLaSH Acquisitions, a blank check company targeting the US healthcare industry, filed on Thursday with the SEC to raise up to $175 million in an initial public offering. The Los Angeles, CA-based company plans to raise $175 million by offering 17.5 million units at $10. Each unit will consist of one share of common stock and one-fourth of a warrant, exercisable at $11.50. At the proposed deal size, VIDA FLaSH Acquisitions will command a market value of $219 million. The company is led by Chairman Scott Huennekens, who has been the Executive Chairman of Acutus Medical and Wondr Medical since 2019. He is joined by CEO and Director Frank Litvack, who has co-founded numerous healthcare companies and investment firms including Pura Vida Investments, Trialtech Medical, Advanced Interventional Systems, and Progressive Angioplasty Systems. VIDA FLaSH Acquisitions intends to target businesses primarily operating in the healthcare sector in the United States, with a specific focus on growth-stage medical technologies, diagnostics, digital health, and genomics companies. VIDA FLaSH Acquisitions was founded in 2021 and plans to list on the Nasdaq under the symbol  FLSHU . Goldman Sachs is the sole bookrunner on the deal. Artificial intelligence-powered autonomous vehicle sensor startup  AEye Inc.  today announced that it plans to go public via a special-purpose acquisition company. The deal will see AEye merge with CF Finance Acquisition Corp. III in a deal that values the company at $2 billion. As part of the deal, AEye will raise $225 million in private investment in public equity from investors that include GM Ventures, Subaru-SBI, Intel Capital, Hella Ventures and Taiwania Capital. CF Finance Acquisition Corp. III will also contribute $230 million to the company in trust. Founded in 2013, AEye offers iDAR, an artificial perception platform for vehicle autonomy, advanced driver-assistance systems and robotic vision applications. The company’s iDAR offering uses lidar to create a real-time map of the environment using last pulses but adds a twist on the technology by adding a camera that generates images with natural light. The iDAR technology is said to deliver a significant reduction in the amount of processing power it takes to generate a useful map. When the company raised $40 million in venture capital from Intel and Kleiner Perkins  in 2018 , AEye said its technology enables autonomous vehicle perception software to run up to 10 times faster than normal. The use of lidar technology is well known in autonomous vehicles, but AEye has set its sights on a broader market including support for industrial and mobility applications, including aviation, mining, traffic systems and drones. Notable among the company’s partners is aircraft manufacturer Airbus SE. “Active Lidar is a game-changing technology with the potential to transform many industries,” Blair LaCorte, chief executive officer of AEye, said in  a statement . “With our unique modular system design and go-to-market strategy, we can deliver solutions via technology licensing, custom component bundling or an integrated hardware and software system.” AEye had raised $89.1 million,  according to  Crunchbase. The SPAC merger is expected to close in the second quarter of 2021.