Case Study: Viveon Health (SPAC Sponsor)

Case Study: SPAC Sponsorship

How ClearThink Capital guided Viveon Health Acquisition Corp through the SPAC Sponsorship and IPO process

~4 Minute Read

Background

Viveon Health Acquisition Corp. (NYSE: VHAQ) (“VHAQ”) began trading on NYSE MKT on December 23, 2020. VHAQ is a special purpose acquisition corporation, or SPAC, formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination. While VHAQ may acquire a business in any industry, its focus is on the orthopedic and spine industry in the United States and other developed countries.

When ClearThink was first approached by the individuals now serving as the management team of VHAQ, they were seeking advice on structures by which they could acquire one or more qualifying companies, whether by means of private equity or other avenues. ClearThink, the principals of which have substantial SPAC experience, introduced the concept of the SPAC and assisted management in gaining familiarity with the structure, the variables, and the market, as well as the various market participants.

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SERVICES

SPAC Sponsor Advisory

Growth Capital

Venture Consulting

TRANSACTION SIZE

~$10M Sponsor Capital

$175M IPO ($201.25M w/over-allotment)

INDUSTRY

Healthcare

PROJECT LEADERS

Robert Brown

Edward Hamilton

Our role in SPAC engagements includes the following:

Educate the management/sponsor team to ensure that they are comfortable with the structure, its requirements, and advantages/disadvantages
Evaluate and assist in building the sponsor team to ensure that the team has the necessary domain expertise and access to maximize the opportunity for a successful business combination, as well as have institutional appeal for the SPAC IPO
Assess and estimate the risk capital required by the team to be properly funded through the SPAC IPO and initial business combination
Structure the sponsor entity and assist with the structuring of the risk capital to be contributed by the sponsor/management team, as well as assist with the administration of such offering on behalf of the sponsor entity
Recommend and introduce experienced professionals, such as counsel, accountants, and investment bankers, required to effect the SPAC IPO
Advise the sponsor entity and the sponsor/management team through the SPAC IPO, including quantitative capital modeling and documentation drafting and review.

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Immediately following ClearThink’s engagement, they were anxious to get started. Following our due diligence review of the initial members of the sponsor/management team, we assisted with the branding of Viveon, as well as the preparation of an investment banker “teaser deck”, designed to highlight the team, the target-rich environment, and the industry dynamics of the proposed target industry.

As these initial members of the Viveon sponsor/management team were highly professional and experienced, with an extraordinary level of domain expertise and access, ClearThink was provided with tremendously deep and thoughtful industry data, which aided our preparation. This data was instrumental in providing information required to assist the sponsor/management team in determining the size SPAC to be sought, initially $100 million to $125 million.

Learn more about how we help SPAC Sponsors ►

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With the completed teaser deck in hand and consensus as to the size SPAC to be pursued, ClearThink made its recommendations to the Viveon team with respect to investment bankers, counsel, and auditors and arranged and attended with the team in person (pre-COVID) meetings in New York with each of the candidates.

Following selection of the professionals, ClearThink undertook advising the team as to the structure of the sponsor entity and amount and structure of the proposed risk capital offering, in this case a newly formed limited liability company, and assisted with the preparation and review of the necessary documentation. As the team desired the risk capital offering to be structured principally for family offices and high net worth individuals, including those with which the team had pre-existing relationships, we introduced a broker-dealer to conduct the risk capital offering. ClearThink assisted the team by analyzing the amount of risk capital required and administering the offering on their behalf, including providing educational materials and insight as to SPACs to their prospective investors.

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Interested in learning more about SPACs? We have free SPAC resources.

SPAC Sponsor Handbook ►

SPAC M&A Handbook ►

The Lifecycle of a SPAC ►

Comprehensive SPAC FAQ ►

The team quickly met the required minimum to close the risk capital round based on the then projected SPAC size, consummated initial closings, which gave the sponsor entity sufficient funds to engage the professionals and commence the VHAQ IPO process.

As the VHAQ IPO process started, the drafting of portions of the registration statement was allocated among the team, counsel, the investment bankers and others. ClearThink assisted the sponsor/management team in drafting and revising the business section, the largest single section of a VHAQ prospectus, and strategizing as to the most relevant and impactful industry data, which was provided by the team.

Three weeks after the filing of the VHAQ registration statement, the Securities and Exchange Commission informed the team, counsel, and investment bankers that it had no comments on the registration statement. While the team felt that it was the appropriate time to refile the registration statement and commence the roadshow, the SPAC marketplace was suddenly in flux with changes in terms taking place daily.

ClearThink advised the team on at least a daily basis as to proposed alternative SPAC terms and their prevalence in the market and provided quantitative models to illustrate to the sponsor management team the affects which changes in terms could have on the sponsor entity, the team members, and the public investors.

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Ultimately, the structure was settled between VHAQ, the team and the investment bankers, but required the sponsor entity to seek substantial additional sponsor capital, a large portion of which was provided through relationships of ClearThink.

VHAQ is now trading and well postured to seek its initial business combination.

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“ClearThink is delighted to have had the opportunity to assist and advise the Viveon team. They each have extensive domain knowledge and access and constitute an ideal team to seek a highly valuable initial business combination. We look forward to continuing to provide advice and support and following their future success.”

– Bob Brown, Chief Executive Officer, ClearThink Capital LLC

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Case Study: SPAC Sponsorship

Background

Interested in learning more about SPACs? We have free SPAC resources.

Let’s discuss how we can help guide you through the SPAC Sponsorship process.