Getting hired at a SPAC
I got a job at a SPAC a few weeks/months ago and thought I'd share a few reflections.
- It is really lean/light. SPACs have limited working capital that they have to pay for everything (lights, market data, salaries, D&O insurance, etc.) for their search period. So you won't get the Bloomberg accounts, access to GLG, etc.
- SPAC leaders have very specific ideas in mind for who they want to hire. My SPAC was looking for juniors with X years of IB, Y years of PE, and deep deal experience in Z. They are not looking for the generalist all-around-athletes.
- They source through personal networks and luck. Going back to the lean/light, SPAC leaders don't have time or money to work with headhunters or do a broad outreach process or conduct multiple rounds of structured interviews. I saw the job ad through college alumni mailing list.
- They move fast. I had 2 interviews, a case study, and an offer in writing within a week. They also told me I had 3 days to accept it or they'd move onto the next guy. I accepted it within 3 hours. This speed translates to the deal side as well.
- The comp is very attractive. Cash comp is lower, but its more than made up with equity. You might have a reasonable debate on the risk characteristics of the equity (vesting, post-merger performance, etc.) but on paper its attractive.
- You have to be comfortable with knowing there's an end date. SPACs by definition have a limited existence, either through a merger or a liquidiation. So it's a fun ride, but it's a 2-year ride at most.
Should caveat that my shop is an "independent" SPAC, which is different from a PE-sponsored SPAC, which operate in many ways like an extension of the PE fund (and the above may or may not apply).
Pretty interesting.
Is your team structured like a typical PE deal team? Given the short lifespan, is culture non-existent / extremely cut and dry?
Yes to your first question. On the second, it's actually a lot more collaborative / a lot less toxic than IB or traditional PE because a) all of our incentives are aligned - we are here to do ONE deal, b) we already know our comp in advance, and c) it's a small team so there's no politics or internal competition (or at least way less).
Has your sponsor raised multiple SPACs?
If not, what happens to your position after the SPAC merges - do you potentially take an operational role?
My sponsor hasn't raised multiple SPACs before, but if this is successful, they will want to do another.
It's hard to have visibility into individual positions after merger.. to take an operational role means the target has to also agree, which is tough when there's no certainty of the target yet. Maybe I'll join the target, maybe I'll saddle up for the next SPAC. It could be anything. But the way I see it, Wall Street is so volatile that a "2 year job" is any less uncertain than anything else out there.
Thanks for doing this! I thought SPAC pays for the opex from the IPO proceeds? Any color on comps for mid-level professionals (say VP equivalent at a BB)? In terms of case study, is this more strategic focus given no LBO
SPAC pays opex out of risk capital, the $ the sponsor contributes, so they want to keep it as lean as possible.
Yeah, the IPO proceeds go into a trust where they can't be touched. OpEx is from risk capital out of the sponsor's pocket. Not sure I have any color on mid-level professionals as there are no VPs here. As for case study, it was minimal modeling, but just thinking of how an asset would be received by public markets and what story to tell.
Congrats. Seems like it is pretty high stakes. Would be interested to hear how your firm thinks about being really careful with the acquisition target bc you have one shot vs gotta get something done before the clock runs out?
Yeah, that's a dynamic we're seeing a lot. That's why the "quality" of the sponsor, i.e. ability to access deal flow vs. being "dumb capital" desperate get a deal, any deal, even a bad deal instead of no deal, matters.
Thanks for sharing! I’ve been wondering about this for a while whether SPACs will become an alternative exit path from IB.
If it does, it will be few and far between and one-off, due to the fact that SPACs are run lean and light and don't have the time/energy/resources to get into the headhunter cottage industry that normally recruit out of IB.
What's your role after you find a target and de-SPAC to become a normal publicly-traded opco? Like if your SPAC found a target next month would you be out of a job or is there a plan to place you within the PF org? Interested because this is the fist time I've heard of an "independent" SPAC hiring for this role given they'd typically hire bankers for the search / execution process
Impossible to tell without knowing what the target is ahead of time, because the target has to agree to to take you on as an employee. But if we found a target next month and I'm out of a job.. well.. I still have 2 years worth of pay for 3 months of work :-D.
Wait to your last point, you're saying that you'll continue to be paid for 2 years regardless of the outcome??
What kind of background do you come from (IB, PE, something else)? I always wondered what the day to day difference is like between working specifically on a SPAC deal and a PE deal. If you cant, would you be able to elaborate on that?
I’m in PE and can’t stand the amount detail that goes into every bit of financial modeling (aka my whole job).
BUMP. Would be curious as well. Have seen headhunters ramp up their SPAC search and have been thinking about recruiting for SPACs
How are potential SPAC opportunities sourced? Is it via the same way prospective opportunities within PE are sourced (bankers, lawyers, proprietary, etc.)?
Exact same, except I'd say the deal opptys presented by bankers are materially worse that sourcing for PE.
Do you agree incentive are structured so it’s better to do a deal vs doing a good deal? Certainly feels that way.. especially w all the money behind it now.
I also wasn’t aware that there were so many billion dollar unicorns hah.
Lol anyone willing to write a check can create a unicorn. I’ll start an LLC with a billion units tomorrow and sell you one for $1... boom we’re in the club
What is a reasonable range of stock comp for associates in a SPAC?
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