Company: COHN
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007158
Chunk: 3037

Company: Cohen & Co Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 7
Chunk 3037
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 in an interest bearing trust and can only be used to complete the business combination.  Generally, the public investors must approve any business combination prior to its effectiveness.  If a business combination is not completed within the agreed 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 entitles them to a combination of unrestricted common stock, restricted common stock, and (in some cases) warrants of the post-business combination SPAC (which is a publicly traded company).  The following summarizes the Company's accounting policies related to its 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, the Company has 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 the Company was the managing member of a sponsor entity, it also had a significant economic interest in such sponsor entity and therefore consolidated such sponsor entity.  
•In all cases where the Company consolidated a sponsor entity, it has determined that the sponsor entity's private placement investment in the SPAC that it sponsored 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, the Company has chosen not to elect the fair value option.
•If a SPAC completed its business combination, the sponsor entity's investment in the SPAC was converted to a combination of unrestricted and restricted shares in the post-business combination SPAC.  At this point (assuming the Company consolidated the sponsor entity), the Company accounted for the shares received at fair value.  The Company reclassified any remaining equity method investment to other investments, at fair value and recorded principal transactions income for the difference.  The Company recorded non-controlling interest expense for the SPAC shares that were 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