WEBVTT - 388620785

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Katie, I

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<v Speaker 1>got the ipox spack index pulled up here on the

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<v Speaker 1>Bloomberg terminal. It reached a high of thirty three cents

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<v Speaker 1>back in February. Since then, it's down. A lot has

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<v Speaker 1>changed in a little over a year when it comes

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<v Speaker 1>to spacks. Yeah, absolutely, I mean they were the shiny

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<v Speaker 1>toyah right, It's like the pandemic hit and then boom SPACs. Yeah,

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<v Speaker 1>everything exploded. Well, let's talk to Mike Ryan about it.

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<v Speaker 1>Mike's CEO of Bullet Point Network. Mike previously was a

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<v Speaker 1>partner and co head of Global Equities at Goldman Sacks,

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<v Speaker 1>also an investment committee member at the Harvard Endowment. It's

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<v Speaker 1>good to have you with us, Mike. How are you great? Jim,

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<v Speaker 1>thanks for having me. I should know you're also a

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<v Speaker 1>board chair of the Alpha Partners Technology Merger Corporation. We

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<v Speaker 1>want to talk spacks here, Uh is it? I mean,

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<v Speaker 1>we we saw a lot of spacks being pulled and

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<v Speaker 1>we're still right now seeing you know, pretty much each

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<v Speaker 1>and every week a spack that has been announced, come

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<v Speaker 1>out and say no, we're not going to do it,

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<v Speaker 1>or we're gonna return money to shareholders, or we're not

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<v Speaker 1>going to acquire that target company. What's going on with SPACs? Well, Look,

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<v Speaker 1>I think the market overall for growth stocks has been

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<v Speaker 1>very challenging, as you've been talking about here for days

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<v Speaker 1>and weeks, with more than half of the Nasdaq stocks

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<v Speaker 1>down more than from their highs, and all kinds of

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<v Speaker 1>public well known established companies like Netflix and Zoom, also

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<v Speaker 1>other high profile I p o s, Lemonade, cors Era

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<v Speaker 1>all down about from their highs. So it's pretty natural

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<v Speaker 1>that the stack market, which is primarily catered to growth

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<v Speaker 1>companies and emerging early stage growth companies in particular, is

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<v Speaker 1>also down overall. I think it's really a story of

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<v Speaker 1>growth stocks, um you average, I PO down, the average

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<v Speaker 1>back down. Investors don't like losing money, and I think

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<v Speaker 1>we need to uh let the market settle. We need

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<v Speaker 1>to make sure that the companies that come to market

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<v Speaker 1>through this back product or otherwise are the right companies

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<v Speaker 1>at the right prices. So what does due diligence look

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<v Speaker 1>like They're when you're trying to suss out you know

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<v Speaker 1>what are the right companies and what is the right

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<v Speaker 1>price for that company? Yeah, that's a great question, Katie. UM.

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<v Speaker 1>There are a lot of private companies that you probably know.

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<v Speaker 1>There's about eleven and fifty private unicorns, you know, valued

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<v Speaker 1>it more than a billion dollars. Most of them aspire

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<v Speaker 1>to be public, and I think over the next three

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<v Speaker 1>to five years, uh, you'll see many many companies come public.

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<v Speaker 1>When we look at a business right now, we're looking

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<v Speaker 1>for the same old fashioned basic things that have always

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<v Speaker 1>been important to us. We're looking for a great business.

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<v Speaker 1>We're looking for something that has differentiated products, come petitive

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<v Speaker 1>mode around it, and is run by trustworthy and competent management. Ultimately,

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<v Speaker 1>what we think it's all about is growth and profitability.

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<v Speaker 1>I think what happened last year in the broad equity

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<v Speaker 1>market as well as in the I p O market,

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<v Speaker 1>as well as in this back market is um people

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<v Speaker 1>really lost discipline on profitability and a lot of companies

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<v Speaker 1>that had no clear path to profitability uh came into

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<v Speaker 1>the public market. And I think, Uh, that's probably not

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<v Speaker 1>going to happen again soon. I think there are companies

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<v Speaker 1>that are clearly burning capital and investing in their future. UM.

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<v Speaker 1>But they need to have real credible path to profitability

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<v Speaker 1>in order to be well embraced in today's market. And

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<v Speaker 1>so I think what we're looking for our great companies

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<v Speaker 1>run by great management with growth and profitability outlooks that

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<v Speaker 1>we can get behind and that investors will like. And

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<v Speaker 1>then you have to bring it out a price that

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<v Speaker 1>makes sense for the market. What is the advantage of

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<v Speaker 1>doing as back in the environment. Well, again, I think

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<v Speaker 1>the many companies want to be public, and they want

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<v Speaker 1>to be public because they want to have a merger

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<v Speaker 1>currency to do M and A transactions. They want to

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<v Speaker 1>have a stock option currency to attract and retain and

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<v Speaker 1>motivate their team and be able to have a competitive addetace.

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<v Speaker 1>Why not just go public, you know, through a traditional

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<v Speaker 1>I p O or a direct listing. Well, I think

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<v Speaker 1>you'll see a lot of all the above. Um, you know,

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<v Speaker 1>last year there were many I p o s regular

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<v Speaker 1>way i p O s. This year they've only been

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<v Speaker 1>I think forty one, and only about twenty of them

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<v Speaker 1>have been twenty million dollars or more in the regular

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<v Speaker 1>way I p O market. And so with I p

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<v Speaker 1>O s, traditional i p O s essentially down about

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<v Speaker 1>as much as stacts. You know, I think the stack

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<v Speaker 1>market down a p O market on average, down forty

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<v Speaker 1>six month end. They've been a handful of direct listings,

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<v Speaker 1>some of them, you know, the averages, they don't matter

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<v Speaker 1>because it's only a handful of them there down more

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<v Speaker 1>than so you really have a phenomena where growth stocks,

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<v Speaker 1>especially cash burning companies that don't have a clear path

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<v Speaker 1>to profitabilities have sold off. And I think that's happening

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<v Speaker 1>for public stocks that have been outstanding for years, it's

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<v Speaker 1>happening for I p o s, and it's happening for spacts. So, Mike,

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<v Speaker 1>I mean, does your view of the spack market sort

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<v Speaker 1>of have to be predicated on the trajectory for growth

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<v Speaker 1>stocks then well, I think the majority of companies that

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<v Speaker 1>are looking at going public in any format, including in spacts,

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<v Speaker 1>need and want capital as well as that public currency

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<v Speaker 1>that I mentioned earlier. I think growth companies are generally

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<v Speaker 1>the majority of I p o s. And you know,

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<v Speaker 1>technology in particular, I think has had a massive positive

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<v Speaker 1>effect on the world and as a big enormous segment

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<v Speaker 1>now of the stock market. So I think you'll you'll

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<v Speaker 1>imagine that a lot of the I p O s

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<v Speaker 1>will continue to be technology, health care, other segments of growth.

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<v Speaker 1>But you're certainly seeing spacts and non spact transactions in

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<v Speaker 1>you know, materials, industrials. Obviously, energy is a very hot

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<v Speaker 1>sector now in the public markets and elsewhere with oil

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<v Speaker 1>prices as far as they are. So you'll see things

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<v Speaker 1>of all types, but the predominance of ideo activity has

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<v Speaker 1>been in growth companies, and most of the growth companies

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<v Speaker 1>have been in technology and health care. So, Mike, what's

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<v Speaker 1>attractive to you as board chair of the Awful Partners

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<v Speaker 1>Technology Merger Corporation. Well, we're looking for companies that have

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<v Speaker 1>that special characteristic. They have growth, they have paths of profitability,

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<v Speaker 1>they're run by great management. And you know, frankly, we're

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<v Speaker 1>lucky because we have a lot of options out there

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<v Speaker 1>that fit that bill. We also need companies even in

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<v Speaker 1>this even in this environment, there are a lot of options.

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<v Speaker 1>There are. Indeed, um companies have stopped wanting to go

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<v Speaker 1>public and uh and again, I think over the next

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<v Speaker 1>three to five years you'll see a lot of ideas

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<v Speaker 1>and a lot public listings for these companies. I mean,

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<v Speaker 1>one of the great things about the US capital markets

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<v Speaker 1>is with the broadest, deepest pool of money in the

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<v Speaker 1>world and having successful public listings is going to continue.

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<v Speaker 1>You've had so far a year to date. I think

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<v Speaker 1>I just read the worst start to a year since

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<v Speaker 1>nineteen sixty two. So the stocking really under pressure now.

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<v Speaker 1>And so I've seen this before. You know, we saw

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<v Speaker 1>this in you know nineteen the I P. O market

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<v Speaker 1>closed completely for a time. We obviously saw this after

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<v Speaker 1>the dot com uh and so you're just seeing normal

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<v Speaker 1>volatility and you're seeing a decline in volumes. But I

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<v Speaker 1>think for the right companies at the right prices, they'll

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<v Speaker 1>still want to go public and Stack to be part

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<v Speaker 1>of that, all right, Mike Ryan, We're gonna have to

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<v Speaker 1>leave it their CEO of bullet Point Now. We're also

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<v Speaker 1>a board chair at the Alpha Partners Technology Merger Corporation,

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<v Speaker 1>talking Stacks that is going to do it for Bloomberg

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<v Speaker 1>Business Week on behalf of the Katie Greifeld, I'm Tim Stanivik.

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<v Speaker 1>A big thank you from the entire team here at

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<v Speaker 1>Bloomberg Radio. This is Bloomberg