The DESPAC Terms Private Companies Should Negotiate Hardest — Chris Sorrells

From The DESPAC Podcast · 55:02

Show by Chaz Churchwell

The headline valuation is the wrong number. Chris Sorrells says private companies should compare SPAC offers on net usable cash and fully diluted ownership, and treat almost every term as negotiable.Chris Sorrells, Founder, Chairman and CEO of Spring Valley, joins host Chaz Churchwell for a sponsor's-eye view of the DESPAC process. Chris has spent more than 30 years helping first-of-their-kind technology companies reach the public markets, including NuScale Power and General Fusion. He walks through the five tests Spring Valley applies to SPAC targets, why his team won't take a company public without a PIPE, how to negotiate convertible preferred, the mistakes that sink DESPAC deals, and the timeline from LOI to close.What We Cover:- The five tests that make a strong SPAC candidate- Why Spring Valley requires a PIPE and two years of cash- How to diligence a SPAC sponsor before you sign- Net usable cash vs. headline valuation- Minimum cash conditions and the S-1 window- Convertible preferred: resets, floors, PIK dividends- Hidden costs: deferred underwriting and broken-deal fees- Treating the announcement as the finish line- Why conservative valuations matter- The DESPAC timeline, and why to assume trust is zeroConnect with Chris Sorrells:Website: https://sv-ac.comLinkedIn: https://www.linkedin.com/in/chris-sorrells-5a6a836/Connect with Chaz Churchwell:LinkedIn: https://www.linkedin.com/in/chazchurchwell/Protect Your Transaction:Churchwell Insurance Agency specializes in D&O, E&O, representations and warranties, and public company liability for SPAC sponsors, DESPAC targets, and post-merger companies. https://www.churchwellagency.com/Follow The DESPAC Podcast:Website https://www.thedespacpodcast.com/ · LinkedIn https://www.linkedin.com/company/thedespacpodcast/ · YouTube https://www.youtube.com/@thedespacpodcast · Apple https://podcasts.apple.com/podcast/id1855942535?mt=2&ls=1 · Spotify https://open.spotify.com/show/1pA3EuEU656ZsEEx1Te4C2A One Iron Network production: Executive Producer Joshua WilsonThe DESPAC Podcast is for informational and educational purposes only. Nothing in this content constitutes legal, investment, tax, or financial advice, nor a recommendation to pursue or avoid any transaction. Consult qualified legal, financial, and tax professionals before acting on any information discussed. News Theme 1 by Audionautix is licensed under a Creative Commons Attribution 4.0 license. https://creativecommons.org/licenses/by/4.0/THE DESPAC PODCAST DISCLAIMERThe DESPAC Podcast is for informational purposes only. The views and opinions expressed by the host and guests are their own and do not represent the views of One Iron Network LLC, its affiliates, or any sponsoring organization.Nothing in this podcast should be interpreted as legal advice, investment advice, tax advice, or a recommendation to pursue or avoid any transaction. Discussions may reference SPACs, DESPAC transactions, securities regulations, or public-company readiness frameworks. These conversations are educational in nature and should not be relied upon when making financial or strategic decisions.Listeners should consult qualified legal, financial, and tax professionals before acting on any information discussed in this podcast. Any examples or scenarios mentioned are illustrative and may not reflect current market conditions or regulatory requirements.Participation by a guest does not constitute an endorsement of any company, strategy, product, or service. References to specific firms or individuals are for context only.One Iron Network LLC and the DESPAC Podcast disclaim all liability arising from the use of or reliance on the information presented.

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