What SPAC Investors Are Actually Looking for Right Now — Christine McNerney

Every SPAC sponsor thinks their pitch stands out. Christine McNerney has seen them all — and most don't.

Christine McNerney, Associate Portfolio Manager at Periscope Capital, has been with the firm since 2012 and focused on SPACs since 2021 — from testing the waters through selective PIPE financing. Periscope itself has been active in the SPAC market since 2016.  In this episode, she breaks down exactly what separates fundable sponsor teams from forgettable ones, how Periscope evaluates de-SPAC targets, why the current market is healthier than it looks, and what private companies need to understand before going public via a blank check company. For SPAC sponsors, PIPE investors, and de-SPAC operators navigating today's capital markets landscape, this is an unfiltered look at how decisions actually get made.

🎯 What We Cover:

• What sponsor teams consistently get wrong in testing the waters meetings
• How to articulate deal criteria beyond generic talking points
• The ideal sponsor profile — operators vs. dealmakers and why both matter
• Geographic scope: why non-US targets carry additional risk and scrutiny
• What Periscope looks for first when evaluating a de-SPAC opportunity
• Why equity coverage and peer set matter more than most targets realize
• How the SPAC process gives companies a valuation edge over a traditional ECM IPO
• Lessons from 2020–2021 and what's fundamentally different in today's market
• Why repeat sponsors now represent nearly 70% of SPAC IPOs — and what that signals
• Advice for de-SPAC companies struggling with post-combination stock performance

🤝 Connect with Christine McNerney: 💼 https://www.linkedin.com/in/christine-mcnerney/ 🌐 https://periscopecapital.com/

📩 Connect with Michael Blankenship: 💼 https://www.linkedin.com/in/mikeblankenship/ 🌐 https://www.thespacpodcast.com/

📩 Connect with Joshua Wilson: 💼 https://www.linkedin.com/in/joshuabrucewilson/ 🌐 https://www.thespacpodcast.com/

🎙️ Follow The SPAC Podcast: 🌐 https://www.thespacpodcast.com/ ▶️ https://www.youtube.com/@thespacpodcast

Disclaimer: Michael J. Blankenship is a licensed attorney and partner at Winston & Strawn LLP. Joshua Wilson is a licensed Florida real estate broker and holds FINRA Series 79 and Series 63 licensure. The content of this podcast is for informational and educational purposes only and should not be considered legal, financial, or compliance advice. All views and opinions expressed by the hosts and guests are their own and do not necessarily reflect the policies or positions of any regulatory agency, law firm, organization, or employer. Listeners should consult their own legal counsel, compliance teams, or financial advisors to ensure adherence to applicable regulations, including SEC, FINRA, and other industry-specific requirements. This podcast does not constitute a solicitation or recommendation for any financial products or services. Let's 

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Transcript

Ch 1 — Welcome & Christine McNerney's Background

SPEAKER_01 0:00

Mike Blankenship with the SPAC Podcast Day. I'm joined by Christine McNurney from Periscope Capital. Christine, why don't you give us a few minutes about yourself and Periscope?

SPEAKER_00 0:09

Sure. So Periscope Capital is a Toronto-based alternative asset manager. We have a Multistrat fund. And one of the key focuses that we have in the Multi-Strat fund is SPACs. And we participate in SPACs through all stages of the life cycle. So, you know, testing the waters very early stages, IPOs, secondary market trading, warrant trading, and then all the way to selective DSPAC financing. Myself, I focus more on the beginning stages of the SPAC lifecycle. So I do a lot of the testing the waters. A lot of the IPO decisions go through me. And I would say that there's very few sponsor teams out there in the SPAC world that I have not spoken to. So yeah, a lot of the IPO stuff, I'm the expert.

Ch 2 — How to Stand Out in a Testing the Waters Meeting

SPEAKER_01 0:59

Yeah, that's terrific in a lot of viewpoints. So let me ask, so you know, how can a management team stick out in the testing the waters meeting?

SPEAKER_00 1:08

So I don't know if people realize that when they come to a testing the waters meeting as a sponsor team, they are showing me and other investors basically carbon copies of the same presentation. So it's going to have their terms, it's going to have their bios, it's going to have what they're looking for, it's going to have a page that has the logos of all the companies that they've been affiliated with. So what really makes you stand out is having more than just the generic talking points. You know, if you say to me, I'm going to find a company that's ready for the public markets, like tell me what that means. And it's surprising sometimes that people can't answer that. They don't really have a good way to articulate how they're going to view a company and decide if it's ready for the public markets. You know, if they say they want a capable management team, what is a capable management team? And again, you know, people might just say, like, it's just a hunch I have. And then I have to decide how much do I value your hunch as just, you know, some person that I'm meeting for the first time. Obviously, if you are a multi-time repeat spec sponsor, you have more credibility behind your hunches. You know, people that have very lengthy histories and deal making, their hunches are probably valued a little bit more. But still, if you can articulate what you're specifically going out there to find, that makes a big difference. And not a lot of teams do that.

Ch 3 — What Makes an Ideal SPAC Sponsor Team

SPEAKER_01 2:38

Yeah. And then speaking of teams, like who should actually launch a SPAC and what does that ideal sponsor look like from your point of view?

SPEAKER_00 2:46

I mean, it's not a celebrity. I don't want to see the 2020, 2021 celebrity SPACs ever again. I think that in that time period, we had a lot of people looking at the market and saying, well, like everybody's got a SPAC, so I can do it too. And obviously, we know that that didn't pan out very well for the vast majority of teams. So, you know, not everybody should have a SPAC. I like a sponsor team that has a mix of both operators and deal makers. I think that they tend to find the best targets and are able to take them public and do something with that company. People that have, you know, a more niche Rolodex, like obviously everybody that's doing a SPAC says, like, you know, I can pick up the phone and get 20 companies on the line right now, but so can everybody else. So, like, is your experience level in tune and in line with what specifically you're going out there to find? And not everybody has that. So, you know, I like to see a large depth and breadth of experience in the markets and in operations. And, you know, obviously, again, if you are a repeat sponsor team, if you've done a deal before, if you know what it's going to take to get the SPAC to the finish line, that has a lot of weight.

SPEAKER_01 4:07

Yeah, and then let me ask you on geographic scope. So it's you know, you get a lot of SPAC sponsors that may be non-US or US, and and I don't mean just Canada, Canadian, but like Asia or Europe. And, you know, does that make a difference to you? Because they're looking at certain potential targets in areas that may be more risky to be public in the US, or or how do you view that?

SPEAKER_00 4:31

Yeah, I I think it does make a difference. I think we've seen a lot of, you know, just historically speaking, spacks that, for example, have found uh targets in Asia, they haven't tended to have performed as well as some of the US targets. Sometimes they're looking for things that seem so geographically difficult, uh, you know, like defense in areas that are probably not going to be as received as well in the US. You know, it can be tricky. I think you're walking a fine line, and it can be tough because it's also hard to verify the experience levels and the roll index of people that are in, you know, more geographically niche locations. Um, you know, you could be with a really large company in Vietnam, and it's going to be a little bit less applicable when you start calling companies in other areas that people might not be as familiar with it as they would with, you know, the big brand names that the US FACs are kind of dealing with in their, you know, their backgrounds and their bios. So it can be difficult. It's certainly not impossible. Certain regions are much more friendly and beneficial than others. You know, we've seen a lot of really interesting things coming out of Europe lately with the quantums. So, you know, like it's not all equal. And certainly you can find something interesting in a different geography, but it's how well are you going to be able to say the story to the US audience? It can't always translate perfectly. So, you know, it can be tricky.

SPEAKER_01 6:11

Yeah, that makes sense. So when you are evaluating a DSPAC, you know, opportunity, what do you focus on first when you're looking at them?

SPEAKER_00 6:21

So I mean, obviously you want to look at the industry that they're operating in. How big is it? We've seen some really interesting companies that are in such niche industries where they're just not going to have a comp set. And that's going to make it really difficult for them to get equity coverage. So sometimes I'm talking to these DSFAC companies, I'm like, your company is legitimately cool, but I just don't think it's going to be received well by the equity markets because they're just, it's going to be too much work for everybody to learn about your tiny small cap company that has no peer set. So it tends to, those tend to get, you know, orphaned a little bit. You're not going to have equity coverage. You're not going to be invited to the conferences. You're not going to be able to get out there. So, you know, do they have a good peer set? Do they have, you know, equity analysts that are going to be interested in covering them? Are they in a topical area? You know, for SPACs, I think the best de SPACs are ones that are capitalizing on an interesting trend. So, you know, are they getting in on that? I think that's really where SPACs shine is, you know, you can get out into, you know, quantum is a great example. It's something that's very topical right now, and you're able to go public much more quickly with a SPAC. So, you know, you're able to get out there as something that's going to capture the market's attention. Something else I always really pay attention to is how well is the management team, and this is the management team of the DSFAC company, the target company, how well are they able to tell their story? Because, you know, first of all, they've got to sell their story to me, but then they've got to go out and sell their story to the world. And you can see people struggling with that sometimes and things that are a little bit trickier, like maybe biotech. Uh, you know, I'm always very upfront with these teams saying, I'm not a biotech analyst, I'm a generalist. So you're gonna have to, you know, translate it for me. You're gonna have to say it in a way that I'll be able to understand. And sometimes that really does not happen. And I just know they're gonna go out there and the market's gonna have a harder time understanding it than something that's a little bit, you know, easier to explain, or they have hired somebody that's going to be able to explain it very well. Um, I've seen that a lot again in the quantum companies where they tend to have somebody that's able to be the bridge between what's happening at the company and what the investors need to hear. I don't need to hear all of the nitty-gritty details. I need the big picture, I need where you fit in in the overall picture of the industry, and I need the financials. And if you're able to explain that in an interesting, captivating way, I think that'll go very far. So, you know, you end up looking at a lot of things, like valuation is of course very important. Uh, you can sometimes find founder-led companies that maybe are a little bit less receptive to what the market is going to think their valuation should be, as opposed to maybe what they personally should think they're think their valuation should be. So that can be tricky. But you know, there's a lot of things that go into the D SPACs. And you know, at Periscope, we don't participate in many D SPAC financings. You know, we've done selective pipe financing. We tend to be very selective in what we participate in, but we always try to be a good sounding board for the D SFACs. So, you know, come tell your story to me, we'll give you feedback, we'll help you with you know valuation and tell you if it makes sense or if it doesn't make sense. How can you, you know, better relay your story? So even though we aren't necessarily participating in all of the D SFACs, we certainly see them all. So it's you know, it's an interesting space to be in right now. We're seeing a lot of different uh industries coming into play, and some of them are certainly being more well received than others.

Ch 6 — Sectors and Companies Where SPACs Have an Edge

SPEAKER_01 10:24

Uh well, going down that a little bit further. So, where do you see you know SPACs make the most sense today? Are there you know particular types of companies and sectors mentioned quantum uh computing? But the like, you know, what are where are you what's your view if you were to look it up? I'm not not making a commit here, but like what's what are you thinking?

Ch 7 — SPAC vs. Traditional ECM IPO: The Valuation Advantage

SPEAKER_00 10:44

Yeah, I'm not we're not going down that. Uh certainly things that are highly topical, and you know, as I mentioned, it's a much shorter timeline from you know the D SPAC to actually being the public company than it is if you did a more traditional IPO, which means that you can capitalize on these market trends and market focuses. So that can be very interesting. You know, we're seeing a lot of companies right now that are focused more on defense, and that is obviously highly topical, and they'll be able to go out and find something and bring it to market more quickly. Uh, things that are high growth. Uh you know, obviously with the FCC rules, you're not allowed to give the projections the way that you used to be able to, but you're still able to get much more feedback. You know, when I I've worked both equity capital markets with traditional IPOs and SPAC IPOs, and it's a very different process. You know, with an ECM IPO, they're coming to you. Maybe you can give like a little bit of feedback on where in the range you think it'll fall, but the pricing isn't decided until right before. Whereas with a SPAC, like we will be engaging with the company for weeks and weeks while we go back and forth and discuss valuation to discuss metrics, which means that they're gonna have both a better understanding of how the market, the SPAC market, will receive their IPO, as well as more certainty in the valuation, which is very beneficial for these companies. So I think the high growth, highly topical, you know, kind of niche but not super niche sectors can be very interesting for DSPACs.

SPEAKER_01 12:21

Yeah, and and let's go back in history just you know, five years ago. I mean, it seems like it was just yesterday, but like 2020 and 2021.

SPEAKER_00 12:28

Yeah.

SPEAKER_01 12:29

What have you, you know, what have you seen fundamentally change in the SPAC market?

Ch 9 — The Rise of Repeat Sponsors

SPEAKER_00 12:33

So, I mean, 2020, 2021 was an exciting time to be in SPACs. And certainly everybody was in SPACs. It was it was nice. It was no longer, you know, where you tell people you work in SPACs and people say, what on earth is that? At least people knew what it was, but uh there were far too many SPACs at that time. You know, we had over 600 seeking SPACs, and that's just not the market can't handle that. There's not that many companies that need to de-SPAC. So we had a disconnect there. So we're seeing a lot more, I'd say, measured control in the market right now. You know, we certainly had uh a high level of IPOs in January and February. And while that started to get a little concerning, we started to see, you know, whispers of 2020 and 2021, the market has done a good job of correcting itself and pairing back on these IPOs. So I don't think we're gonna get to that crazy level that we were at before. But we're also seeing a high level of repeat sponsors. So, you know, I haven't looked at the number in the past month or so, but at the end of last year, we were at almost 70% of SPAC IPOs. We're with repeat sponsors, and I have a lot of a lot more faith in those repeat sponsors, even if their previous SPACs liquidated or, you know, found a company in the public that isn't trading as well, they have a much better understanding of what it will take to get something to the public markets and hopefully have learned from the things that happened before and they'll be able to perform a little bit better this time around. So we're seeing a lot more repeat sponsors that just have a much better understanding. And obviously, we are seeing strong repeat sponsors as well that have had very successful DSFACs under their belt and they're coming back to the market, which I think also gives a lot of confidence to the investors in the market. You know, we're seeing that people that believe strongly in the product and don't believe that it was just a you know a funny COVID fad are still coming back. They're still seeing value in bringing companies public through this method. So I have a lot more faith in where we are now, where we are today versus where we were in 2020 and 2021. You know, I ask me again if we see a you know Beyoncé sponsored SPAC, I might start getting a little bit worried again, but we're not there yet. So overall, I think we're in a good position. I really I'm confident with the sponsor teams, uh the vast majority of the sponsor teams that I'm talking to. They have a very strong and solid understanding of the market as a whole.

Ch 10 — Advice for De-SPAC Companies Struggling Post-Close

SPEAKER_01 15:07

Yeah, I mean, I I I agree. I think there's a lot more, you know, visibility and they continue to see that and they learn from those mistakes. But on the on for the targets, like what would you give at what would be your advice on the DSPAC that may struggle at closing? Because maybe they took a too high evaluation, you know, they need to be careful coming out or or something happened, not necessarily a macroeconomic issue, but them, you know, on their own business. What what advice would you give them?

SPEAKER_00 15:34

I mean, I think that it's very important for the D SPAC companies and the sponsor teams to have a long-term view. And this that's the case with a traditional IPO as well. Like you're probably going to see some volatility in your stock price in the near term, you know, while the market kind of decides on what the appropriate valuation really is. Uh so I mean, if you're thinking about it as a one-month, a three-month, a six-month hold, it's it's gonna be a tough time. Hopefully, you're having a longer-term viewpoint. And SPACs really shine when the sponsor team has a set of skills and experience that's gonna complement the D SPAC team. So, you know, again, that's the ideal situation for the SPAC. They'll be able to work together and increase the value and increase the, you know, the operations of this D SPAC company, which will hopefully help grow the share price in the in the medium-term future. You know, it's it can be tough. Like we've certainly seen a lot of D SPACs trading at, you know,$2. And it's not always reflective of a failing company. It could just be they came out a little bit too aggressive with your valuation, and you're gonna have to kind of pay the price for a little while, and hopefully we'll we'll get you back up there.

unknown 16:55

Yeah.

SPEAKER_01 16:56

Well, putting your sort of your hat on the future here, um, Crystal Ball, uh, where do you see the rest of this year as far as spec? We've seen a lot of new issuance already. And so where do you see that um kind of at the end of the year?

SPEAKER_00 17:11

So, you know, as I mentioned, I'm speaking to a lot of sponsor teams, I'm speaking to a lot of banks, and I do think that we are mostly in agreement that we need to have a more measured approach to the spec issuance market. We had a very aggressive 20 or early January and February, so early 2026. It was and end of 2025 with a lot of issuance. Uh, but we're seeing teams saying, you know what, I'm okay to take a step back. I don't need three or four seeking SPACs at a time, the way that people felt that they needed earlier. You know, they're a little bit more measured in. I'm gonna find a target and then I'll move on to the next one. Um some franchise SPACs aside, but you know, most of the smaller teams are kind of doing one at a time. It's a more appropriate way to do a SPAC, I think. Uh we're seeing teams being a little bit more willing to adjust size, adjust terms, or weight, which all of that I think is indicative of a market that is not willing to let 2021 happen again. We do not want to have, you know, 400 orphan SFACs floating around. Um, I think that we will start seeing that we've hit in a problem when we, you know, we start seeing the SPACs that do funny things like, you know, a six-month term plus three, plus four, plus one, plus plus, you know, those like funny extension packages that they had for a while, things like that. It's a it's a way of kind of artificially inflating the yield, and it's it's not, it doesn't work out. So I think that we're seeing both the banks and the sponsor teams and the investors not willing to accept what we had happen before. And hopefully the more measured approach will make it so that we have a more long-term sustainable market in the SPAC world.

SPEAKER_01 19:14

Yeah, I completely agree. There was a lot going on. We still have a lot seen. So it'll be an interesting year. Hopefully, we'll see a lot more D SPACs closed as well.

SPEAKER_00 19:22

We need to see the D SPACs. I'm telling that to every team. Don't issue until we start seeing more D-SPACs being announced. Um, because right now we have, I think, 225, 220-ish seeking SPACs. And then we have, you know, about a hundred that have uh targets that haven't closed yet. So, you know, some of those will get canceled, so they'll be back in the seeking space. And then we have a bunch that have uh filed S1. So I mean, if all of those came out, I think we're in a bit of a precarious position, and I don't think we want to be there. So certainly if we have an inflow of really positive DSPAC transaction announcements, then I think that makes some more room for new spacks to come in. But until we start seeing that churn, I think we need a little bit of a more measured approach in the IPO issuance.

SPEAKER_01 20:17

I agree. Well, Christine, it's been a pleasure. I really appreciate you uh coming on the podcast today.

SPEAKER_00 20:22

Absolutely. Thank you so much for having me.

SPEAKER_01 20:25

All right. Well, this is Mike with the SPAC podcast.