Company: COHN
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007158
Chunk: 2970

Company: Cohen & Co Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 7
Chunk 2970
---
 upon time frame, the SPAC will liquidate and return the public investors' investment to them.  If there are funds remaining after liquidation, the sponsor entities may receive some portion of their investment back, but it is likely they will suffer a total loss of their investment.  If the business combination is completed, the sponsor entities' private placement in the SPAC will entitle them to a combination of unrestricted common, restricted common, and (in some cases) warrants of the post-business combination SPAC (which is a publicly traded company).  The following summarizes our accounting policies related to our investments in these entities:

     •
     The sponsor entities are LLCs that give all important decision making rights to their respective managing member.  Furthermore, the other members of the LLC cannot replace the managing member.  Accordingly, we concluded that the sponsor entities are VIEs and the managing member has the power to direct its most important economic activities.  In all cases where we are the managing member of a sponsor entity, we also have had a significant economic interest in such sponsor entity and therefore consolidate such sponsor entity.  

     •
     In all cases where we consolidated a sponsor entity, we determined that the sponsor entity's private placement investment in the SPAC that it sponsors should be treated as an equity method investment during the SPAC's pre-business combination period.  Furthermore, due to the difficulty of determining the fair value of such an investment in the SPAC's pre-business combination period, we have chosen to not elect the fair value option.

     •
     If a SPAC completes its business combination, the sponsor entity's investment in the SPAC will be converted to a combination of unrestricted and restricted shares in the post-business combination SPAC.  At this point (assuming we consolidate the sponsor entity), we will account for the shares received at fair value.  We will reclassify any remaining equity method investment balance to other investments, at fair value and record principal transactions income for the difference.  We will record non-controlling interest expense for the SPAC shares that are distributable to the non-controlling interest holders of the sponsor entity.  The fair value of the unrestricted shares received is equal to the public trading price of the SPAC on the date of the business combination.  The fair value of the restricted shares received is adjusted downwards from the public trading price for certain sale restrictions imposed  (generally, they are restricted for sale for some time period and subject to certain hurdle prices before they become freely trade