Going public through a SPAC seems straightforward. Find a sponsor with capital, negotiate terms, close the deal, ring the bell.
Reality hits quickly when quarterly reporting demands start immediately, and institutional investors ask questions management hasn’t prepared to answer. The sponsor who seemed so engaged during diligence disappears after closing, leaving the company to figure out being public on its own.
Peter Wright has spent two decades as CEO of McKinley Acquisition Corp and founder of Intraact, watching this pattern destroy companies that treated SPAC sponsors as capital providers instead of long-term partners.
Working with both private and public companies has taught Wright that the sponsor relationship determines whether going public accelerates growth or becomes a distraction.
Strategic Alignment Matters More Than Capital
SPACs provide capital, but strategic alignment provides value. Sponsors who understand the business model, the end markets, and the long-term goals add more than money.
“A good fit can accelerate your trajectory,” Wright explains. “A mismatch can derail momentum real fast.”
Strategic alignment means the sponsor has experience in the company’s sector, understands dynamics, and knows which investors care about that space. A sponsor with healthcare experience, for example, adds more value to a healthcare company than a generalist sponsor with a larger balance sheet.
This matters during transaction structuring, investor roadshow preparation, and equity story positioning. Sponsors with strategic alignment make better decisions because they understand what matters to the business and which investors will value that story long-term.
Misalignment shows up quickly. Sponsors who don’t understand the business model push for short-term metrics that impress retail investors but alienate institutional capital. They prioritize transaction speed over building a durable shareholder base.
Companies discover this too late, after they’re public with a sponsor who can’t add value beyond the capital provided at closing.
Institutional Credibility Opens Doors
A sponsor’s track record determines which investors pay attention. Their relationships with institutional capital, reputation in the markets, and history of successful transactions signal whether this is a serious opportunity or another SPAC looking for any deal.
“You want a sponsor who opens doors to long-term shareholders, not short-term traders,” Wright warns.
Institutional investors evaluate sponsors as carefully as they evaluate companies. Sponsors with strong track records and institutional relationships secure meetings with tier-one investors that emerging growth companies can’t arrange on their own.
This is about trust built through previous transactions. Did the sponsor’s last SPAC deliver on projections? Did the company remain public and grow, or did it struggle?
The sponsor’s reputation becomes the company’s credibility until the company proves itself as a public entity.
Operational Support Separates Partners From Check Writers
Emerging growth companies consistently underestimate what being public requires. Demands such as quarterly reporting, investor relations, and governance structures hit immediately after closing when teams are still learning how to operate as public companies.
“The right SPAC sponsor should provide ongoing support post-merger, from investor relations to governance to helping your team navigate quarterly reporting,” Wright emphasizes. “This is where real value is added.”
Sponsors who stay engaged after a merger help companies avoid costly mistakes. They connect management with experienced investor relations professionals. They provide guidance on disclosure practices and SEC compliance. They help navigate the first earnings calls when management is still learning how to communicate with public market investors.
Sponsors who disappear after closing leave companies figuring this out alone. Management teams waste time on issues the sponsor should have anticipated.
The difference shows up in how companies perform in their first year of being public. Companies with engaged sponsors navigate the transition smoothly. Companies without support stumble through avoidable problems.
Choose Partners, Not Just Capital
After two decades working with emerging growth companies on capital market strategies, Wright stresses that choosing a SPAC sponsor is about finding a partner who can help tell the story and support growth well beyond the transaction.
“The right sponsor doesn’t just get you public,” Wright concludes. “They help set the stage for lasting success.” The sponsors who add real value open doors to quality investors and offer operational support that helps companies navigate being public. Sponsors who only bring capital leave companies struggling with everything else.
Going public should be a platform for growth, not a distraction from building the business. The sponsor relationship determines which outcome you get.
For insights on SPAC transactions and capital market strategies, connect with Peter Wright on LinkedIn.
