In today’s SPAC market, we’re seeing more sponsors incorporate performance-based earn-outs into their promote structures. These earn-outs typically delay sponsor equity until certain milestones are reached, such as stock price thresholds, EBITDA targets, or time-based vesting.

This approach is designed to better align sponsor incentives with long-term shareholder value and public market performance. Investors, including PIPE participants and public shareholders, may view these structures favorably as they seek alignment with the company’s future growth. While not required, performance-based promotes are becoming more common among sponsors focused on long-term outcomes.

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Who qualifies to lead a SPAC? It’s a question we hear often—and the answer might surprise you. In this short episode of The SPAC Podcast, we break down who can become a SPAC sponsor and what truly sets successful sponsors apart.

From private equity professionals to former CEOs, venture capitalists, and even family offices and athletes, the sponsor pool is more diverse than many realize. But regardless of background, the key ingredients are the same: deal-making credibility, access to $5–10 million in risk capital, and a strong network. Tune in as we explore the evolving sponsor landscape and what it takes to launch a SPAC in today’s market.

#SPACs

#SPACSponsor

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#InvestmentBanking

#PrivateEquity

#VentureCapital

#FamilyOffice

You might think SPAC sponsors just show up and collect a payday.

But the good ones? They put real skin in the game.

Most sponsors invest millions of dollars in risk capital just to launch the IPO.

If they don’t close a deal in 2 years, they lose it all.

That’s high-stakes conviction — not just compensation.

And it’s one of the clearest ways to judge sponsor alignment with investors.

Talking Points:

• Sponsors typically cover the risk capital upfront.
• This covers legal, IPO, and administrative costs.
• If no deal is completed, that capital is lost.
• It’s one of the clearest signals of sponsor alignment with public investors.
• Also used to buy private placement warrants (not in the public trust).

Let’s talk about the SPAC ‘promote.’

Sponsors typically receive 20% of the company’s post-IPO equity.

That’s the reward — or the ‘promote’ — for building the deal.

But here’s the controversy: if the deal underperforms, the sponsor might still win.

That’s why more deals now tie the promote to real results — like stock performance, revenue milestones, or investor approval.

When the promote aligns with performance, everyone wins.

Talking Points:

• “Promote” = typically 20% of post-IPO equity given to sponsor.
• Intended as reward for risk-taking and leadership.
• Can misalign incentives if sponsor profits regardless of deal quality.
• Recent trends: performance-based vesting, clawbacks, earn-outs.
• SEC scrutiny has increased around transparency of promote terms.

Who’s really in charge — the sponsor or the CEO?

Before the merger, the sponsor runs the show: raising capital, finding the target, and structuring the deal.

But once the merger is complete?

The CEO of the acquired company takes over.

The sponsor might stay involved — maybe on the board or as an advisor —

but from that point forward, the CEO drives operations, growth, and strategy.

It’s a relay — not a tug of war.

Talking Points:

• Sponsors control the SPAC entity and capital before merger.
• The CEO of the target company takes operational leadership post-merger.
• Sponsors may help select or vet the CEO during the deal process.
• Clear roles are critical to avoid confusion or power struggles.
• Many sponsors step aside post-transaction, though some stay on as board members.

Let’s break it down — what exactly is a SPAC sponsor?

A SPAC sponsor is the mastermind behind the deal.

They form the entity, fund the setup, go public, and search for the private company to merge with.

Think of them as the architect — designing and negotiating everything that happens before a business goes public.

They’re not usually the CEO after the deal. They’re the bridge between private innovation and public capital.

Talking Points:

• Acts as the “founder” and initial architect of the SPAC.
• Provides initial funding and organizes legal + IPO prep.
• Often includes experienced operators, financiers, or PE/VC pros.
• Drives the entire lifecycle up to the business combination.
• No involvement in day-to-day operations post-merge (unless board/advisory).

“Welcome to the Public Markets”

Welcome back to The SPAC Podcast. This is our final episode in the SPECIAL series — a framework covering the seven key stages of the SPAC process.

We’ve walked through:
S: Sponsor Setup
P: Public Raise
E: Evaluate Targets
C: Combination Planning
I: Investor Engagement
A: Approval Process

Now we arrive at L: Launch as a Public Company.

Once the business combination is approved and closed, the private company officially becomes public. The merged entity begins trading under its new ticker symbol, and the SPAC structure dissolves.

PIPE proceeds are funded, sponsor shares convert, and the company now steps into a new phase — reporting earnings, engaging shareholders, and scaling as a public business.

For the founders, it’s just the beginning. For the SPAC sponsor, the mission is complete.

That’s the SPECIAL journey — from blank check to public company.