Company: COHN
Filing Date: 2025-08-04
Form Type: 10-Q
Source: 0001437749-25-024506
Chunk: 92

Company: Cohen & Co Inc.
Filing Date: 2025-08-04
Form: 10-Q
Item: Item 1
Chunk 92
---
 included in Item 1 of this Quarterly Report on Form 10-Q. 

       58

The SPAC Market

In 2018, we began sponsoring a series of SPACs.  In addition, we invest in other SPACs at various stages of their business life cycle.  Beginning in 2019, these SPAC activities have become a significant portion of our Principal Investing business segment. In August 2018, we invested in and became the general partner of a newly formed investment fund (the “SPAC Fund”), which was created for the purpose of investing in the equity interests of SPACs and SPAC sponsor entities including SPACs sponsored by us, our affiliates, and third parties. Effective April 1, 2023, all of the investors in the SPAC Fund, other than Vellar GP, redeemed all of their interests in the SPAC Fund.  In February 2025, we sold our interest in Vellar GP.  

As a complement to the SPAC Fund, we established and became manager of two newly formed umbrella limited liability companies (the “SPAC Series Funds”) that issued a separate series of interest for each investment portfolio, which typically consisted of investments in the sponsor entities of individual SPACs.  Generally, when a SPAC acquires or merges with a privately held target company, the target company winds up owning a majority of the resulting outstanding equity of the SPAC so the transaction is accounted for as a reverse merger.  Private companies utilize reverse mergers with SPACs as a method of going public as an alternative to a traditional IPO.  All of our business activity related to SPACs is highly sensitive to the volume of activity in the SPAC market.  Volumes could be negatively impacted if target companies no longer see SPACs as an attractive alternative thereby reducing the number of suitable potential business combination targets.  Also, investor demand for SPACs would be negatively impacted if the stock of SPACs that successfully complete a business combination underperform the market.  If volume of SPAC activity declines, our results of operations will likely be significantly negatively impacted.  

Our CCM business is also heavily concentrated in the SPAC Market with many of its clients being SPACs or former SPACs.  In addition to earning new issue and advisory revenue in these engagements, we sometimes receive financial instruments as part of our compensation, and this increases our investment in SPACs and former SPAC