Nasdaq, Inc. (NDAQ) Earnings Call Transcript & Summary

Hello, and thank you for joining today's webinar, the Summer SPAC Forum. I'm John Jannarone, the Editor-in-Chief of IPO Edge. And I'd, first of all, like to thank our sponsors and partners for today's event: Sidley Austin, NASDAQ, Goldman Sachs, ICR and The Palm Beach Hedge Fund Association. A quick note before we get into the material is the Q&A and replay. So at the end, we're going to leave 20 minutes or so for questions from the audience. And to submit those, just use the Zoom portal or send them to me at editor@IPO-Edge.com. And for anyone who wants to watch the replay later on, it will be posted within a couple of hours wrapping up on ipoedge.com. So with that, a quick overview of today's agenda. The first topic is going to be SPAC as an alternative traditional IPOs. So in that piece, we're going to kind of discuss what's been driving the surge in SPAC activity recently. Next, we're going to talk about the success that we've seen on the back end, the de-SPAC process, which is the most important part. What's been driving that success? And what's going to keep it in shape in the future? Then we're going to talk about the evolution of size and features of SPACs. We just set a record early this week with Bill Ackman SPAC, and there have been some adjustments to the features over time as well. Then we're going to talk about growth companies using SPACs to go public, which has been increasingly popular in 2020. And last, we're going to do a look ahead into the fall and talk about what sorts of trends we expect to see then. Finally, we'll leave space, as I mentioned, for a Q&A. With that, I'll let the panelists introduce themselves briefly. Jeffrey, if you could go ahead first.

Good afternoon, and thank you, John. I'm very happy to be here today to participate on this panel. I am an M&A and private equity partner at Sidley based in our Chicago office. I've worked on quite a few SPAC transactions, and our firm has been very involved in representing SPAC sponsors and structuring SPACs in SPAC-IPO transactions, representing SPACs and target companies in business combination transactions and all sorts of investors and sponsors in these transactions. Most recently announced among them, the rep saying, on the target side, the MP Materials and it's SPAC transaction with Fortress, which was just announced earlier this month. Looking forward to this afternoon's discussion.

Okay. Great. And Olympia, have you dialed in there?

Yes, I'm on. Hi, everyone. Olympia McNerney. I'm a Managing Director at Goldman Sachs, and I run our U.S. SPAC business. I have worked with many of you on the phone and looking forward to the discussion today. Thanks for having me.

Great. And Eli, go ahead.

Hi there, it's Eli Baker, I'm a partner at Eagle Equity Partners. And we have been the sponsors of 6 SPACs now, which I think is the most to date, at least in the SPACs per iteration. Currently, I'm the President of Flying Eagle Acquisition Corp., which we launched I think just actually as COVID hit, so it's been outstanding for about 3 months right now. And the most recent one we completed is DraftKings, which we completed also in the spring.

Great. And Karen?

Sorry about that. Hi, I'm Karen Snow. I run East Coast listings and capital services at NASDAQ. I've been with NASDAQ about 1.5 years, and prior to that was at Crédit Suisse where I worked in banking and equities, and took a lot of SPACs public, and I've taken a lot of SPACs public now and de-SPAC-ed at NASDAQ. Thanks for having me.

Great. Thanks. And last, Don Duffy?

Thanks, John. Thanks for having me. I'm the President of ICR. We're the leading communications and advisory firm, doing a lot of work on SPACs. I co-run the firm and one of the leaders in our IPO and SPAC practice.

Great. And just quickly about me, as I mentioned, I'm the Editor-in-Chief of IPO Edge and also our sister site, CorpGov. So let's move on to the first section here, SPACs as an alternative to traditional IPOs. So as we'll see in a minute with some slides from Jeffrey, there's been an incredible surge in activity in SPACs, a growing percentage of IPOs. And what we want to discuss a bit is what's behind that. What kinds of companies are choosing SPACs and are they choosing SPACs instead of IPOs? And is there a very, very large amount of money growing out there that's going to keep growing in these SPACs as hunting for targets? So Jeffrey, I'll let you kick it off.

Great, John. Well, why don't we just do it quick? We won't spend a lot of time on slides, but there are a few very interesting slides here, I think, in terms of just showing the trend and the elevated role that SPACs are playing in capital markets and M&A today, and the definite sort of increasing importance and sort of mainstreaming of SPACs in those areas. As we can see from this first one, SPAC IPO activity, which is the step of SPAC going public, raising the funds, they are put in a trust account. That level of activity has significantly increased over the last few years and is on a path this year to exceeding fairly soon given the activity for filings that haven't even been completed yet. The levels, which were record levels last year, we've already exceeded that in dollar volume because many larger SPACs are being raised. And this slide, which was prepared as of 7/15 does not even take into account the Pershing Square SPAC, which is just launched and is $4 billion. So we are raising this with another SPAC, I think, that launched this week to almost $17 billion in gross proceeds. And we could sort of see the down below just sort of how that's played out this year, but an accelerated number of IPOs in May, June, and we're only halfway through July, and we know we're already at May-June levels. Going to the next one slide, the SPAC business combinations that have been completed. This is really the most interesting step, I think, and actually the most difficult because this is -- and then we're going to spend, I think, much of the time today talking about this de-SPAC-ing process. But 72 companies have, essentially, over the course of the last 2.5 years become public companies via a merger or a business combination transaction with a SPAC. That's 72 companies, some of whom might not have gone a traditional IPO route, but many of which may have. And I know from personal experience with clients, clients that were running down an IPO path that had pivoted and gone the SPAC route instead. And again, a breakdown at the bottom of that chart on the activity sort of month-by-month this year in that area. And we see that's -- after sort of COVID hit some slowdown in that activity just as with all M&A activity, hard to sort of get -- sort of on track to complete the diligence in some respects, right in the midst of when COVID first hit and the uncertainty around it, but things are picking up, we are definitely seeing the de-SPAC process continuing. And then the next slide, I think, is maybe the most interesting, and this is SPAC searching for business combination. So essentially, when a SPAC goes public, it has 24 months essentially to go find a business combination partner, subject to going out and getting an extension if it needs it towards the end of its life, which more and more SPACs have been doing. But what this shows is approximately 100 SPACs are out there, and it is over 100 now because this was prepared as of July 17 with almost now with the Pershing Square SPAC, $30 billion in trust to find a business combination partner. This is quite an extensive sort of pipeline of activity that's going to stretch out and we've broken it down in this slide sort of in 6-month breakouts of how many SPACs need to complete within those time periods to meet their 24-month deadline. It doesn't mean that a SPAC couldn't complete much earlier. The one that I mentioned earlier, the MP Materials-Fortress SPAC, Fortress had gone public just 72 days before announcing the merger agreement with MP Materials earlier this month. And then the next slide does show a breakdown broadly of the sectors, industries or geography that SPACs are focused on. Obviously, a good deal in fintech, tech area, TMT, but frankly, across the economy, there's -- there are SPACs searching for business combination partners. So that -- I think that all demonstrates very well sort of the very significant role that SPACs are starting to play in the capital markets and deal activity.

I would just add, John, I think -- this is Don. There is -- if you go back one slide, John, if you look on the bottom, when you think about traditional IPOs as well -- the sector slide one.

Yes.

What's interesting is there's -- tech is certainly a very big IPO sector. Health care has been a big IPO sector and consumer. But when you look all the way to the bottom of that slide, software, that's one category you haven't seen a lot. And I would just add to what Jeff said, and I do think there's a lot of discussions about SaaS companies, in particular, and other traditional tech companies that normally went the IPO route that have more optionality now to think about the SPAC structure because of the liquidity it provides and because how well institutional investors have received these transactions.

Great. Well, let's move on to the next topic -- well actually, Don, if you wanted to dig into this slide, we could, otherwise, we should move along.

Yes. Sure. I'll touch on it very quick. Obviously, it's a SPAC call, so we have to suggest that SPACs are the best alternative, right? But in all seriousness, look, they're appealing to people, one, because they raise primary proceeds; two, they can often solve for secondary sales, which a traditional IPO would have some limitations because owners of the business have the ability to roll equity, it does afford continued upside. I think the big issue, and certainly, we probably have a lot of investors on this call, but what we continue to hear from everybody is institutional investors like this structure because they get to talk to management teams multiple times. They get a webcast, they get a deck. Those -- that information is filed with the SEC. They have access to management teams. Unlike an IPO, where they're getting a 1-hour meeting, over the de-SPAC process, they have multiple months where they can do multiple calls. And I think the biggest factor that comes up is the company is typically given some level of forward-looking guidance. And for those of you who are not familiar, often, the primary way institutional investors get access to the forecast is really through the investment bank's analyst that develops a model, but the company as part of an IPO is not putting out a forecast. A lot of institutional investors like the fact that management teams have put a stake in the ground and provided forward-looking information. And in addition, you have a SPAC sponsor that has negotiated evaluation, essentially a clearing price. So I think that's certainly a big benefit. And last but not least, and we talked about this in the deck we issued today, but it's available to all investors. I think what we repeatedly hear from a lot of institutional investors, and it's people like Neuberger Berman or Baron Asset and other folks that are great long-term investors who have been very active in the SPAC structure, is that they don't get a full allocation on an IPO. And so they may be very interested in a company and an institution could put in a $20 million order, but get a $1 million allocation. What's so unique about the structure is if I move quickly after a merger announcement, I could go into the market if I'm not part of a pipe, and it's like a live order book. I can go in, I can buy as much stock as available in the current market. And that's a big differentiator. In addition, if I'm a retail investor, the day the deal that's announced, Don Duffy, trading from his E*Trade account or his Robinhood account has as much access to publicly traded SPAC shares trading, as does Fidelity. And so in many ways, you now have opened up a process to every investor not just the clients of the firms working on the IPO. So it does really create a much larger funnel for investors to participate in the transaction if they want to.

All right. Great. Well, we could talk more about this but let's keep moving so that we can get -- we have plenty of time towards the end. So the next topic here is the success of the de-SPAC process, which I think Jeffrey just agree with me on is the most important step of the process, and we've seen a lot of success with this. And we're fortunate that we have a Eli Baker with us today who was -- who lived through this with DraftKings. And I'm going to let Eli take the stage in a second, but let's just take a look here at how some of these have performed. So here's a handful. So you look at DraftKings, along with Nikola, Virgin Galactic, and you got SPAC there. These, as I'm sure many of you know, have traded extraordinarily well after they became real companies. And I'll hand it over to Eli then to talk a little bit about what he thinks about the de-SPAC process and what he saw as he lived through with DraftKings.

Yes. Thanks, John. Yes, I completely agree. The de-SPAC process is obviously essential. But maybe the more important question is when and how does the de-SPAC process begin. I know they talk -- we talked generally about de-SPAC-ing is at towards the end of the business combination. But I'd suggest that actually the de-SPAC process starts exactly at the moment you've signed your LOI or your term sheet with a target company, right, and preparing for a very lengthy process in how you're galvanizing investor interest, and ultimately able to take the company public. So I know everyone's focused and wants to hear a little about DraftKings, so I'll tease out a little bit, which DraftKings is a really special events in many different ways. And DraftKings and Nikola and LendingTree and some of these other spectacular performers have really been the stars in the asset class, and I'm hoping those, along with other great deals that are being announced are only going to further kind of embolden SPAC as the asset class for investors generally, and it seems to be on the path that we're on. But in the case of DraftKings is -- and I know that, John, you also wanted me to talk about PIPEs a little bit. But DraftKings was special because it had a couple of advantages, right? In and of itself, regardless if it's a SPAC, it was really -- it's a future story, right? DraftKings has been around for a while with a huge amount of brand awareness, but was really the first pure-play online sports betting company and beyond that was being offered to public investors. And this is even before -- we started this process well before COVID hit. And so I think we had a number of, call it, let's call it, institutional and retail advantages in DraftKings right from the beginning, which made it a fantastic story for the public markets. In addition, we also had an outstanding CEO in Jason Robins, who had a huge amount of experience in talking to investors, and we also had a superstar CFO in Jason Park, who was able to do the same and to connect with those investors well on the road and even during the PIPE process. Just a word on keys to success in PIPEs and whether PIPEs are really part of this fabric going forward. And SPACs are -- need to be bespoke, right? A SPAC transaction is really specific to each and every company that goes through it. So some deals or some structures won't require a PIPE because either the SPAC has enough capital, raising a PIPE would become too dilutive. But many other transactions are such that they actually need more capital and PIPEs become relevant. But really, PIPEs are actually also extremely favorable tool for all the constituents to a transaction. So what I mean by that is SPAC really offers something to the 3 parties here, which is: one, a target; two, is a sponsor; and three, for outside investors. So in the case of a target, a PIPE, which is often solicited even before, right, and most often, solicited after an LOI or a term sheet is signed but before it's actually announced to the market. And so it gets an ability to go and walk across certain investors, whether actually they're investors in the SPAC or they're third-party investors, including big mutual funds. And it gives the company and the sponsors to go and solicit their early participation. And this is hugely important for targets. So targets might be a little unsettled about the process. Typically, targets are often unsettled about an IPO process, and so it could be the same thing in the SPAC process. And maybe that has to do with their unique structure. Maybe it has to do with the valuation or something else that's specific to the company. And this gives them the opportunity to go in front of a very specific group of investors and to sound that out and make sure that they have early buy-in. For the sponsor, it's equally important because it's able to kind of build institutional support right away. And so as PIPE allows you to go outside and go to the Franklins and Capital Groups and Wellingtons of the world in order to bring in those anchor investors, which is exactly what we did on DraftKings, to be able to demonstrate to the world or the market at large that the big institutional, knowledgeable shareholders are really kind of buying into the valuation or other aspects of the deal. And for investors, this is the opportunity to get an allocation, right? Unlike in an IPO -- in an IPO, the banks will usually have their allocations and the biggest players will often get theirs. They may not get filled, but they'll certainly get theirs. In a SPAC because it's already trading, it may be difficult or very hard in some cases to be able to get size in allocations they want. It's part of -- soliciting a SPAC -- a PIPE, you're able to bring those investors in and in certain circumstances, bring those investors inside. So the process as a whole is extremely important, and it's hard to make a blanket statement about every company, every deal. But I do think PIPEs are becoming to play a more and more -- increasingly more flexible and important role in getting a deal done.

Great. That's terrific, Eli. Don, I think you want a way out of this. You have some thoughts, and I can put up your slides if you want.

Sorry, John, I was on mute. I thought it sounded great. No, I would just add to what Eli said. I think the one piece, I think, that's important is that 3 of the 5 deals on that prior page were transactions we worked on. So I couldn't speak to the other 2. But I think when you do think about it, it's critically important for the management team to understand, the target management teams, what it means to be public. Companies are going through these processes in a compressed time frame relative to an IPO. And I would say for the -- at least the transactions we worked on, every one of those management teams took the process extremely seriously, wanted best-in-class disclosure from an IR and PR standpoint, and realized the importance of paying attention to the things that were going to be critical as they transition to public company life. And so I think when you talk about what are some of the keys to success, realizing you're going to get on the public company treadmill is critical to make sure you have the people, resources and advisers on board to get a successful deal done.

Okay. Great. So, Don, you've got a couple of slides here. If you wanted to use these, we can go through it.

Yes. You can -- I would just touch on very quickly because I think it's repeating it and I know you want to take Q&A today. We look at the processes, really these 3 parts. I know -- I'm sure Olympia could talk about this as well. But when -- slightly different than an IPO, when you announce a SPAC transaction or a merger transaction, you do want to drive a little bit more attention to your transaction and make sure all the investors that should know about it do know about it, and it isn't just about putting out a press release. So there is a lot of work that the banks and the advisers put into making sure you maximize awareness of the deal because as you shift to marketing that transaction post announcement and prior to close, there's a lot of institutional investor meetings. You have to hold an Analyst Day. There's a lot of activity that goes on. But you want to start off on the right foot to make sure all the right investors and sell-side analysts that should care about that target business matter. And in fact, in Eli's case, and he can certainly comment on this. While the SPAC was looking at a lot of different things, they ultimately bought a business that -- where they wanted to focus on very specific analysts and investors that understood digital platforms but also understood the online gaming business. And then -- go ahead, Eli, sorry.

No, I was just going to say, well, Don, it sounds like you're shilling for ICR Services. I'll support you and tell you that, by the way, Don and his team were really helpful in doing that, but he's exactly right. I mean the previous slide was about execution, reaching shareholders, especially reaching institutional shareholders that very early on, can make or break a deal. But even after you get to that point, it's certainly not over yet. And there's obviously months during that process between getting your anchor investors in, in a PIPE, and getting all the way to completion, completing a business combination. And so the marketing really just starts then. And it really means focusing on analysts, and many companies that are going through a SPAC process are something that don't have clear comps. So it also becomes somewhat confusing and very much part of the strategy to target certain analysts, right? It's also targeting certain shareholders, and it's targeting certain investors who may play a certain way and ultimately help you execute your deals. So it's very much a part of the process. It never stops as it closes and even after, then the target company has their own marketing.

Great. Olympia, I'm going to -- I was going to turn to you for the next segment here, but I'm wondering if you have a view as an investment banker on this. Do you look at the whole process holistically as an adviser from IPO all the way through to the de-SPAC process? I think sometimes there are deals where you've got one bank in the front end and one in the back. I mean is that -- how do you guys look at that?

Yes. No, it's a great question. I think every bank probably has a different view. I mean, to us, this is a very holistic process. And so when we're taking on a client and underwriting a client on the front end, we view this as a partnership over the life cycle, just like we would for any company that we're taking public in a regular way IPO. And so it's -- we think it's absolutely critical for us to be on board, not just in raising the capital upfront, but in helping along the way and helping to source and evaluate target and then with everything that's been said by Don and Eli and others around the de-SPAC process, I mean, that really is a moment where the company is coming into the public markets. And so whether it's raising a PIPE, whether it's helping with the marketing process, everything we would be doing in an IPO traditionally is something that we think is absolutely critical. And so that we think about it very much holistically, which we think is the key to success.

All right. Great. So let's go on to the next topic here, evolution of size and features. So of course, this week, we had Pershing Square's $4 billion record-breaking deal price at $20 a share, with a very small fraction of a warrant. So it's much bigger than anything that we've seen before. Eli has continued to work on very large deals, too. So a question, in my mind, is how big can these SPACs get? Are we going to see more than their $4 billion? Or are they going to revert back to where we've seen them? And does it have to do with the universe of targets out there? So I'll turn this back to Olympia.

Yes. I mean I think -- I mean, listen, we've seen a huge vacuum on size. Obviously, Pershing Square was at the very upper end of that. We've seen SPACs like Flying Eagle that are kind of more in the $700 million to $1 billion range, which are on the very, very large end already. And then they scale down. We've got a whole group of SPACs in the $400 million to $500 million and $200 million to $300 million zone. I mean I think at the end of the day, the way we think about capital raising and how you should approach capital raising has very much to do with how you think about the size of the target universe that you're chasing. I think everybody knows that most SPACs are looking for at least the 3 to 4 -- 3 or 4:1 ratio around the amount of proceeds that they're raising at IPO relative to the size of the company that they're buying. And so if you're raising a $5 billion or $5 billion to $7 billion SPAC, you're looking -- arguably, you're looking for a $15 billion-plus company. And that certainly narrows the funnel. So listen, the markets are very much open right now, and we're obviously seeing that just given the pace of deals that's getting done, the size of the deals that are getting done, how these are trading in the aftermarket. Ultimately, we think there's just a much broader scope and universe of investors that are looking at these vehicles, the very interesting vehicles to invest in upfront. It's much broader today than it was a year ago, 2 years ago, 5 years ago. And so certainly, we're going to see bigger deals get done. But we're also seeing, as we've all discussed on this call so far, we've seen a lot of really successful transactions announced on the back end. And that certainly frees up capital, it recycles capital. And so it allows these deals to continue to get done. And so we're of the opinion that this market is going to be here for a while. It's going to continue to grow. But the way to think about size is going to be a very individual decision for the SPAC sponsors as they think about what universe of companies they want to chase after.

All right, John, I just wanted to add because I think what Olympia has said, it goes back to something Eli said, it's a bespoke solution. I don't think everybody appreciates this as much because of the fact that you have a PIPE. When people saw the Ackman SPAC, recognize certain SPACs can go elephant hunting, and there is a market cap range, and maybe it's not as thin. But if you look at the average IPO, the enterprise value of those businesses are sub-$3 billion. And so there's many, many of those. And I think the people are looking at the gross amount of capital raised and not the potential target universe, right? There are hundreds and hundreds of unicorns out there. So it's really about -- there's a fairly deep pool. And to Eli's point, these -- you can create a bespoke solution depending on what the target company wants. Do they want some liquidity, no liquidity, complete rollover? You really have a lot more flexibility than you do with a traditional IPO.

Great. Eli, do you have any thoughts on this? In particular, I'm curious what you think about warrant coverage and how much you guys think about this when you're launching a new SPAC.

Yes. We -- it's something that we talk about every time that we launch a new one. And frankly, the warrant coverage issue, there haven't been too many novel approaches. The Ackman SPAC is a little bit -- is a different example, both for size and the structure. But ultimately, warrant coverage, I think, goes down to -- comes down to whether or not the market and investors who are investing in SPAC at the time of the IPO, by the IPO, I mean, the time that the money is initially raised, really believe in the sponsors they're investing in because ultimately, they're parking money there for some period of time, upwards of 24 months, and they want to see a return on investment. So that's really how they, for the most part, are thinking about it. And I think that the warrant coverage, there's a little bit of spread, and I think it will really follow kind of the quality of the SPAC sponsors and their track record and their consistent history of being able to get a deal done and give really the kind of expected yield back to the original IPO investors. And so I don't really have any thoughts about where it's going to migrate to. I think, again, I don't think it's going to change structurally from where it is today, which is a pretty insignificant band, but I think it will demonstrate that investors will be choosing their SPAC sponsors based on how they feel about them.

Karen, I'm wondering if you've got a view on this because you're going to kick off another section later, but you've been through a lot of these at NASDAQ. What's your perspective on the evolution that we've seen, and where do you see it going?

Yes. So I would say much as Olympia had cited, the market has changed a lot for SPACs. It's a much broader, deeper market than it was even a year ago. I'd say that's driven by the evolution of the SPAC product, the current market environment that we're in, the opportunities that are out there. I think it's really viewed as a legitimate alternative to going public, where a couple of years ago, it was really viewed as a backdoor way to go public. And I think most importantly, investors now are really embracing it. And that's really who we've needed to embrace it. And you can see that with Nikola and DraftKings and some of these others in the way that they've traded. That, I think, has lent a lot of credibility, and also that you have very respectable people coming in launching SPACs now and those that started way back when have built a track record now, and people feel very comfortable investing in new launches.

Got you. Just one thing before we move on to the next section on this warrant coverage, is it a fluke that we saw 1/9 of a warrant on Pershing Square? I mean I feel like we gravitated towards 1/4 for sponsors that had a very strong background. And Eli, what's your take on that? Do you think that guys who are coming who have experience and successful deals that traded well will continue to be around a quarter. I mean you need some incentive there to get these done, right?

Yes, I'm very happy to accept the 1/9 that was on offer. So if anybody is in the audience and he wants to offer it, I'm there. Our last one -- or our current one, rather, Flying Eagle is 1/4, and that was kind of the state-of-the-art in the market. I think maybe there was 1 or perhaps 2 others. The Ackman SPAC is, I think it's an anomaly, famous last word because who knows what we see in the wake of his announcement, both on size and structure. But he's got a following onto himself. I'm sure he's got something in mind in a category or something like that. So until I see more of that drive in that direction, I'm not sure that 1/9 of a warrant is necessarily going to provide the yield that most investors need to come into the asset class. But I could be proven wrong over time.

Okay. Great. Okay. Let's move along. So as we've referenced earlier today, there have been a great deal of companies, some of them very futuristic technology, also fintech, that have traded extremely well using SPACs. And the question is, is this temporary? Because if you look back a year ago or so, you didn't see as many of these using SPACs. And of course, there still are plenty of companies out there that have lots of EBITDA, but this really does feel like there's been a seismic shift towards these growth companies. So maybe, Don, do you want to kick this one off?

Yes. I would just say, I think it's been interesting because you've seen a broad-based mix, right? You've seen pre-revenue companies with potential large total addressable markets, like Fisker or Nikola, Virgin Galactic. You've seen companies that were on explosive growth rates with very real businesses, but investing in those businesses like a DraftKings, almost with SaaS-like, market-like -- marketplace-like capabilities. So in their case, they're really wanting to put capital to work to accelerate growth. And then you have what may be more mature companies with lots of EBITDA, MultiPlan was just announced and Haymaker signed an LOI to buy a convenience store chain, but with a couple of hundred million in EBITDA. So when you look at it, I think it's all shapes and sizes, and it gets back to -- it sound like a broken record, but it does create this bespoke solution, depending on what you're trying to solve for, what the ownership construct of that business is. And certainly, there's differences in underlying appeal to investors. So I think I'm certain some of the companies that would pre-revenue have -- would probably argue that they had a lower cost of capital by funding their businesses in the public markets via a SPAC and that benefited them. I think in other cases, there are probably better structural solutions.

Got you. On this point, something that always jumps out at me from my perspective, I'm looking at these deals that you can see this -- you can see forward guidance several years out. And I'm wondering how you and all those advisers and perhaps you, Eli, look at this. I'm not sure that you had to guess as much. But when you have a company that's giving you EBITDA guidance for 2023, 2024, what goes into that? And how confident do you have to be in those numbers? Maybe, Olympia, you've advised companies on this matter. What's your view on giving that very long-term guidance? And what kind of thought goes into it?

Yes. It's a great question, and I think it's a very company-specific decision. I think it is part of what makes this process very appealing for growth companies who do have longer-dated stories. The marketing of those stories and being able to talk about those for projections is obviously critical and being able to do it in a way where you're controlling that dialogue, and you were thinking about what the right numbers to put out there. That obviously changes your ability to actually market that story. But on the other hand, we think it's very important that when you are putting out numbers, that you are putting a lot of thought into those numbers because you will be graded around them in the public market. And so there are kind of gives and takes with that approach and that strategy. I think for many of these stories that are longer-dated, I think most investors that -- I don't want to speak for people on the phone, but I think people realize that there are a lot of different twists and turns that can come up when you're valuing these companies on the 2024 multiple. And so I think everyone needs to kind of acknowledge that when they look at these stories and think about what the risks are and think about how to discount and think about what the right value is, and it plays very, very much into how we think about approaching these situations and these values so that they work in the market. So listen, I think at the end of the day, it's a positive for how these companies are marketed, and as they think about this path, what is very different than an IPO. But I think it's incumbent upon everyone to really spend time thinking about the numbers and putting out a conservative case because you still are going to be putting that into the public markets and grade it around what you say and what you actually deliver on.

That's great. Karen, I'm curious what you think about this, I mean having taken lots of companies public with regular way IPOs, just say a Virgin Galactic, for instance. If you try to go out and go public with no revenue and without the ability to give forward guidance, and could that have even happened? And how do you feel, as an executive in an exchange, about these companies being able to give these very long term projections.

Yes. Well, that's what we call a story stock. And you do see that often, but you have to have the right market conditions, I would say. And there are certain sectors, biotech is all about the story. So I think there are all types of investors, and there are certain times when story stocks are more well received than not. In this case, as it relates to Virgin, I would say, when you look at all the different alternatives, the SPAC, to me, was 100% the right choice for them because you had someone coming in, doing the diligence on it, really digging deep. It's just a different level of diligence than what happens in an IPO, putting the rubber stamp on the actual negotiated price. And I think Don was talking about the overall process. Investors have several months to meet with management, get comfortable. So that transparency around the whole process, I think, really lended itself to the success that the company has experienced to date.

Got you. Just one more thing while we're on this topic. And Eli, if I can put this to you. Retail investors have been a big part of the story. And I think with a company like DraftKings, you've got a lot of customers of DraftKings who've taken notice of the stock, and that's probably true with a number of these other companies. How do you look at retail investors as part of the investor base?

So it's interesting. So there is -- I'll speak specifically about DraftKings, and I'll speak a little bit more about, let's call it, the more recent phenomenon, which I guess has kind of happened coincided with COVID. So on DraftKings, as I mentioned before, DraftKings is really kind of a special case, maybe Virgin is similar in that way, too, in that there was a huge amount of built-in awareness. And whether -- I highly doubt all -- it was all the customers of DraftKings, who were the ones who were bored at home and decided to buy the stock instead of play fantasy sports. But there were tens of thousands, I don't know if that -- the amount of shareholders is public or not, but there are tens of thousands of shareholders even prior to completion of the business combination because there was such a huge retail following. But I think that was really specific to DraftKings. And I'm sure that Virgin had a very similar type development to it as well. But what I've been hearing, and I haven't been in a de-SPAC -- or another de-SPAC process after DraftKings. But what I've been hearing is that there's a retail element following our -- some of these successful names like Nikola and DraftKings and Virgin that have really a hugely increased appetite for SPACs. And so the broad-based interest has gone beyond institutions and hedge funds and the like, and now it's retail. So I don't know if retail is here to stay. This could be part of this crazy new world that we're in right now. And -- or if the more the asset class proves itself, the more retail investors are also going to follow. I think only time will tell.

Okay. Great. And let's get on to our last topic here before we open up to questions, and quite a few have already come in. So looking ahead to the fall, we've seen a burst of activity here that's been outlined by Jeffrey in the beginning there. But what's coming up in the next few months? And how does the coronavirus environment impact that? Are we going to see more companies going to SPACs? And maybe companies that were not thinking about going public, but were thinking about another round of fundraising. So I'll let Karen take the first stab at this one.

Yes. So I would say that the markets, in general, feel a little bit frothy. SPACs have -- I think Jeffrey shared in his slide, they're now 31.5% of the overall fundraising in the marketplace. I think a lot of people are expecting that to look like 50% by year-end, just to give some context. I think it's become a much more interesting alternative, as I had mentioned earlier. In terms of M&A, I think the supply-demand dynamic comes into play here. Jeffrey shared with us earlier that there's $30 billion sitting in trust right now. And we're all expecting a lot more to be raised by year-end. But I think Don had also mentioned there's a lot of unicorns out there in the IPO pipeline. So when you think about sort of the supply-demand dynamics, I don't think that SPACs are kind of usurping the overall opportunities out there. And the IPO market will remain healthy. I would like to point out for those of you that aren't aware, there is an election coming up, so that does often bring volatility. I think this year will be quite interesting. So we'll see. I would say, in some ways, that lends itself to the SPAC market a little bit more than it does to traditional IPO market. So those people who have been putting their IPO together, and it takes 12 months to do an IPO, may kind of turn to a SPAC offer and say, you know what, this eliminates a lot of risk for me. I'd rather kind of lock something in at this moment in time and move on with my business.

Yes, that's a great point, and maybe I'll put this to Olympia and Don because you 2 have real ability on an IPO pipeline. Is this actually happening where you're seeing companies, clients who have talked to you about going public through regular way IPO and then their minds are changed? Is that happening as we speak?

I would say it's a very real, real discussion. And so the way I would frame it is, I think it's much, much bigger than just what we consider our IPO pipeline. I think as I think about comparing the level of dialogue today relative to what I said before a year ago, 2 years ago, 5 years ago, I think the level of dialogue around the SPAC as a credible alternative, to many different paths, is higher than it has ever been before. And I think that's true for some companies that are considering IPOs. I think there are plenty of companies that are considering IPOs that are still going to head down that path. But it also applies for potentially bringing IPOs forward that were potentially delevering a business more quickly by delivering more proceeds. It applies for companies that are thinking about selling themselves and think there is upside in a business and wouldn't mind being public and riding that upside. That's certainly a path that feels more credible before than just considering a straight sale. And I think it really applies for some companies that are in the late rounds of their funding and are thinking about accelerating an IPO and doing a SPAC and a PIPE all in one. And so it's a long way of saying, I think the lens of companies looking at the SPAC is much broader than it's ever been before, and it's in many different areas of the market as opposed to only companies that are considering or are in our IPO pipeline today.

Yes. That's great. Don, do you have any thoughts -- sorry, go ahead, Don.

I was just going to say I would add -- and here's 2 great examples, John. One is the Churchill-MultiPlan deal. I think MultiPlan was owned by 5 PE firms over the last 15 years. So that was a business that had traded hands privately, where now they're using a SPAC as an alternative. So to Olympia's point, this is a company that could have easily just traded to another financial sponsor that's now coming public. And the other example I'd give you, which I think is a good one, is one market that had been completely shut to IPO is the cannabis space. Andina Acquisition is buying EMMAC Life. They've announced an LOI. And Schultze announced the definitive to buy Clever Leaves. So those are 2 European cannabis businesses that can list here that potentially would not have necessarily -- the market may not have been open for traditional IPO. So I do think, again, it comes back to this optionality. It creates some unique optionality for companies and it opens up a lot more windows to the public markets.

Okay, great. A related question on this, just -- this is probably a black and white answer. If you're going with a regular way IPO and you're looking to take some cash off the table, what percentage really -- how far can you go? And how far can you go with a SPAC? If you've got investors who've owned shares for many years and are looking for a good size exit, is there a big advantage of going with a SPAC in general?

Yes. I would say from experience, I mean, Olympia probably knows the numbers more at the tip of her fingers than I do. But in a typical IPO, I think the rule of thumb, it's somewhere between 10% to 20% liquidity of its market cap. And that's really the cap of it. And it's usually, I think, on the lighter side of that. Of course, there's some additional exceptions from it. In a SPAC, it's -- there's usually an opportunity to be a much greater amount, right, in order to do so. And that's not just because SPACs -- the SPAC amount that you have in trust often represents greater than that 10% to 20% threshold that I mentioned in a typical IPO, but also there's the ability to raise the PIPE. And so you're getting that investor buy-in and support early enough in the process. And so those investors you might get in early, in addition to the parties or the investors that are in the SPAC, will become more and more comfortable in a situation where a greater amount of the company is going to be sold to the public. So that's definitely a big advantage.

Okay. Great. We've had so many questions coming in here. I think we can just start with a couple of those. And let me just remind everyone here. If you want to ask one, go ahead and submit it through either of these 2 ways.