New SPAC MAC Has Above $200M to Expend on Acquisition

Since leaving Geffen in December 2019, Jacobson says he has figured out “the ins and outs of a SPAC,”…

Since leaving Geffen in December 2019, Jacobson says he has figured out “the ins and outs of a SPAC,” whereas Lowen by now experienced decades of expertise. “We’ve been doing the job on this for in excess of a year,” states Jacobson, who also owns Hallwood Media, a producer and songwriter administration company.

With SPACs, identified as “blank check” companies, traders give their money in advance of they know what business will be acquired. Investors get an up-or-down vote on a SPAC’s merger and will be repaid if MAC does not close a offer inside two yrs of the IPO. Following an acquisition, the target will add MAC’s IPO proceeds to its harmony sheet and take over the article-merger company’s identity – stock ticker and all. Jacobson will go from MAC’s CEO to a board member of the new company.

“[We’re] really kicking the tires of a lot of unique techniques of how our SPAC could unfold into the new music industry — which is heading through 1 of the greatest booms in its history, if not the best growth,” Jacobsen states. “I don’t foresee it slowing down at all.”

MAC thinks a company in any a person of 4 types would fit Jacobson’s talent established.: A tunes organization, these as a label or publisher, is an clear possibility, and Jacobson senses chance. “Whilst there is fantastic accomplishment for Warner, Universal, Sony, they’re all executing amazing, there are going to be new organizations that occur up and come to be key gamers in this company,” he says.

Since SPAC traders are attracted a significant-development narrative, MAC will also  take into account a music-focused technology or social media company. Or MAC’s  focus on, claims Jacobson, “might not be a essential songs organization but music is in the up coming iteration of their growth system.”

Whatever the firm, it requires to have strong management, demonstrate double-digit earnings development and be ready for the general public markets, suggests Lowen. “We are not striving to engage in the lottery below. We are hunting for companies that are doing the job.”

MAC hopes to commit its IPO proceeds on a substantial-expansion enterprise with about a $1 billion valuation. It should return shareholders their revenue if will not close a offer in two several years of the community featuring. Size is important because a lessen valuation will not likely interest massive traders with portfolios in the a lot of billions of bucks, Lowen explains.

The concentrate on firm also wants a great story to market investors.

“So, there is a critical mass that you will need to get the variety of institutional-amount assistance to have a profitable equity story,” states Lowen. The ideal music company can in good shape the narrative of a speedy-escalating business in the revived new music market.

Despite the fact that SPACs are decades previous, their popularity has surged in the past two years as retail investors chase the pre-IPO paydays generally reserved for hedge funds, personal fairness and institutional buyers. There were being more SPAC IPOs in the U.S. by way of March 15 of this year than in all of 2020 — 257 to 248, with gross proceeds of $82.9 billion and $83.3 billion, respectively — according to SPACInsider. In 2019, there ended up just 59 SPAC IPOs on U.S. markets.

Some SPAC targets achieve the very same eye-popping valuations that the regular IPOs they handed on might produce. On March 16, eToro, a cryptocurrency investing system, declared it will merge with FinTech Acquisition Corp. V — which raised $250 million by way of a Nasdaq IPO in December 2020 — at a $10.4 billion valuation. Latest reviews said eToro was in talks with Goldman Sachs for a conventional IPO at a $5 billion valuation. Alternatively, eToro will land on the Nasdaq without the need of the pricey fiscal and administrative  requirements and scrutiny of a standard IPO.

SPACs are popular in substantial-expansion industries with no a great deal of a financial history, these as cannabis and battery technology. They are also common in digital media: written content syndicator Taboola and Group 9 Media lately merged with SPACs, and Buzzfeed and Vice — whose values have dropped recently — are reportedly in merger talks with SPACs.

Songs is a relative newcomer to SPACs, compared to more substantial industries that have jumped headfirst into the sector. No home identify tunes moguls have but entered the fray, but it can be quick to envision successful business people this kind of as Jay-Z or Diddy, or recurrent startup trader David Guetta, being either a SPAC founder or advisor. (Caliva, a cannabis company that shaped a joint venture with Jay-Z in 2019, was obtained by a SPAC on Jan. 15.) In addition to attracting buyers, new music celebs could leverage their interactions and experience to assist a firm increase. Although he is not a home name, Jacobson is motivated to be a variation maker for a goal organization.

Jacobson has positioned himself as a proficient music executive who can carry buyers a sturdy acquisition goal and aid unlock its prospective. “I am not hunting to run the company,” he suggests flatly. Even so, SPACs complete greatest when led by a chairman or CEO with functioning experience rather than people today from the money environment, according to a 2020 report by McKinsey & Company. From 2015 to 2019, these “o perator-led” SPACs outperformed other SPACs by about 40% one yr soon after the merger, according to the report.

“I want to be the very best board member they have ever experienced. I want to be the person that operates via partitions for them,” Jacobson says. “I want to be their wild card that can get into rooms other folks can’t get into.”