Tuesday, March 25, 2008
Goldman Sachs SPAC IPO - Liberty Lane Acquisition Corp
Last month, I wrote about about why Goldman Sachs being the only major investment bank not to get into the Special Purpose Acquisition Company was such a worrying trend (that link will also explain everything you want to know about SPACs). Guess they didn't want to dissapoint anybody, so it seems Goldman Sachs just filed for a $350 million blank-check IPO which promises to change the rules of the SPAC game.
A bit of background about Paul M. Montrone. He's from Liberty Lane, Hampton, New Hampshire, which explains the name of the company. A brief excerpt of his profile from the Foundation for the National insititutes of Health, for which he is Treasurer. Paul M. Montrone, Ph.D., Chairman Perspecta Trust and Executive Chairman & Founding Partner Liberty Lane Partners. Montrone was also CEO of Fisher Scientific International Inc. from its initial public offering in 1991 until its merger with Thermo Electron in 2006, forming Thermo Fisher Scientific Inc. Dr. Montrone began his career at the Pentagon, serving in the Systems Analysis Group in the Office of Secretary of Defense Robert McNamara while a Captain in the U.S. Army.
Lynn Cowan, Marketwatch, writes about how and why this particular IPO is a game changer. Goldman's plans, outlined in a Securities and Exchange Commission filing for a company called Liberty Lane Acquisition Corp., which will be led by Paul M. Montrone and Paul M. Meister [Liberty Lane Partners LLC], also tinkers with the format that these deals normally take. In Goldman's structuring of Liberty Lane, management is putting a smaller stake of its own money at risk - $3.5 million, or 1% - and will receive a much smaller share of the company - 7.5% - than is the norm. In addition, the IPO units will contain one share of common stock and a half a warrant each. Both the smaller stake that liberty lane management will receive, if successful, and the lower share-to-warrant ratio makes the SPAC less dilutive to public share holders than the typical structure. Goldman itself is taking a smaller underwriting fee of 6%, below the standard of 7% for most SPACs.
What that means is that Goldman is risking less and stands to gain much less than what a cookie-cutter SPAC manager gets today - Thus making it a more responsible venture (as in less of a con game), and setting a bar which most SPACs to follow will be forced to emulate.
A bit of background about Paul M. Montrone. He's from Liberty Lane, Hampton, New Hampshire, which explains the name of the company. A brief excerpt of his profile from the Foundation for the National insititutes of Health, for which he is Treasurer. Paul M. Montrone, Ph.D., Chairman Perspecta Trust and Executive Chairman & Founding Partner Liberty Lane Partners. Montrone was also CEO of Fisher Scientific International Inc. from its initial public offering in 1991 until its merger with Thermo Electron in 2006, forming Thermo Fisher Scientific Inc. Dr. Montrone began his career at the Pentagon, serving in the Systems Analysis Group in the Office of Secretary of Defense Robert McNamara while a Captain in the U.S. Army. His Forbes profile indicates that he was the 45th higgest paid CEO in 2006, with a total compensation of $23.43M, and ranked 6th for highest compensation among CEO's of Health Care equipment and services for the same year. Both Pauls, Montrone and Meister, are also the principals of Latona Associates, also based out of Liberty Lane, Hampton, NH, with 38 years of investment, acquisition, merger and divestment experience.
To make a long story short, Goldman Sachs' SPAC vehicle, Liberty Lane Acquisition Corp., is standing on solid legs. Montrone is not someone who would put his gold plated street creds on the line for just any old venture, and this one has all the signs of being able to exceed expectations. I'm not a big fan of this acquire, boost, sell and close shop trick, but the least you can say about this particular venture is that it won't be losing money any time soon.
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