How Do SPACs Work?

In this episode of Motley Fool Answers, host Alison Southwick and Motley Fool Personal Finance Expert Robert Brokamp are joined by Motley Fool analyst Bill Mann to explain the nuts and bolts of SPACs as we take Euphonium Industries public. 

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This video was recorded on April 6, 2021.

Alison Southwick: This is Motley Fool Answers. I'm Alison Southwick and I'm joined as always, by Robert Brokamp in my side, Personal Finance Expert here at The Motley Fool. Hey, Bro, how are you doing?

Robert Brokamp: Fine, taking me back to junior high, thank you very much.

Southwick: Yeah. This week, we're joined by Senior Analyst Bill Mann. He's going to help explain the fuss over SPACs. All that and more on this week's episode of Motley Fool Answers. 

So, Bro, what's up?

Brokamp: Well, Alison, the first quarter just ended. Yes, we're already 25% through 2021, and I thought we'd take a look and see how this year is shaping up for investors. So far, it's a pretty good one. Well, depending on what you're investing in. The quarter ended on March 31st, as it always does for the first quarter. All the numbers I'm going to provide are as of that date, things will undoubtedly look a little different by the time we listen to this. But I think the general themes will likely remain. One of those themes is that all of the major indexes are near or at all-time highs. Just awfully nice but still some types of stocks are doing better than others. The S&P 500 is up 6.5% for the year and considering that its historical average is about 10% over the course of a whole year, turning almost seven% for the first three months is pretty darn good. 

Now, the Nasdaq, which has outperformed the S&P 500 every calendar year since 2016, is not doing quite as well. In fact, the Nasdaq was actually up just 1.3% for the year, as of March 30th, but then surged on the last day of March, 1.5%, bringing its first quarter performance to almost 3% or so. As we know, the Nasdaq is very tech heavy and the technology sector was the second worst performing sector in the first-quarter, returning 2.4%, edging out the 1.8% from consumer staples. The winners, so far, in 2021, have been industrials at 11.5%, financials up 16%, and the biggest energy up almost 31% this year. Many of these stocks in these sectors that are doing well so far in the year, were beaten down and are rebounding, which of course is classic value investing, and indeed value stocks are up more than 11% so far this year. But the biggest winners are the smallest stocks. The S&P 600 small cap index is up 18.4%, and the Russell Microcap Index is up 26% so far this year. International stocks have lagged the S&P 500 so far in 2021 returning around 4.5%, but they closed out 2020 pretty strong. So when you look back at the last trailing 12 months or so, U.S. stocks and international stocks are about neck-and-neck, which is looking better for international stocks because they've been lagging U.S. stocks for a long time. I'm reluctant to mention this but I suppose I have to, and that is, Bitcoin is up 100% so far this year, I don't expect to give any updates on Bitcoin too much in the future, but who knows? You can't really not bring it up if you're going to talk about 2021. 

Generally, a good year for stock investors, but for bond investors, not so much. The yield on 10-year treasury has risen to about 1.7% after ending 2020 at 0.9%. As interest rates rise, prices of existing bonds go down. The depth of which depends on various factors, just looking at the Vanguard Total Bond Market ETF, it's down 3.6% for the year. That doesn't sound like a lot but for bonds, that's a pretty significant drop for one quarter. The worst-performing bonds are the ones that are long term. The longer the duration of a bond, the more sensitive it is to movements and interest rates. Long-term bonds are down more than 10% for the year. Again, that's just over the first three months. Investment grade corporate bonds, these are ones that are rated above junk status. They're actually down 5% so far this year. In fact, by some measures, this is the worst start of the year for investment grade corporate since the 1990s. One of the only types of bonds that are actually doing OK, are actually junk bonds, they're actually in the green so far this year, which is because while they also struggle and rates go up, they're also correlated to the economy, the economy is recovering. Junk bonds are doing pretty well when the economy doesn't do so well, like a year ago, and last March, they were down 20% in a matter of a few weeks, which is why you should never choose junk bonds for money that you want to keep relatively safe. 

There's no reason to believe that intermediate to longer term rates won't keep creeping upwards, which means that bonds will continue to struggle. As we often say here at Motley Fool Answers, any money you want to keep absolutely safe should be kept in cash. Short term rates, those are mostly dictated by the Federal Reserve, which has indicated that at least for now, they expect to keep rates low until 2023. The Fed has taken some heat for this, committing to low rates for so long, amid all these concerns of raising maybe an eventual spike in inflation, which to be honest, hasn't quite happened yet. But it does seem like they're going to stick with that at least for now. Partially because, besides price stability, the Fed has a mandate to facilitate full employment, and on April 1st, the Department of Labor announced that 719,000 Americans filed for initial unemployment claims. While that's down from the 6.9 million from a year ago, it's still higher than the pre-pandemic record of 695,000 which was set way back in 1982. Really, we still have a lot of Americans filing for unemployment. The economy still has a long way to go before the true jobless rate is back to where it was before the coronavirus crisis, so that I think is one of the biggest reasons why the Fed is going to keep rates pretty low. Finally, if you're like two thirds of American households, you also own a house, which has also likely gone up in value. A couple of episodes ago, I went into pretty good detail about why house prices keep rising. But I just learned about a new one this weekend from an article in the Wall Street Journal entitled, "If you sell a house these days, the buyer might be a pension fund." The sub-head of this article was, "Yield chasing investors are snapping up single-family homes, competing with ordinary Americans and driving up prices." The article quoted John Burns as a real estate consultant and he estimates that roughly one in five houses in some metro markets is being bought by someone who never moves in. 

Investors, whether it's just a mom and pop investor, a pension fund, an institution, they're moving into the market, competing with the folks who are trying to buy a house, and as John Burns said, "That's going to make U.S. housing permanently more expensive." I suppose that's good for people who are looking to cash in their house in the near future, but it's certainly tough out there for the folks who want to buy a home. I have to say, I have a lot of sympathy for the young families out there who maybe don't have the resources to win a bidding war. Best of luck to you, I'll just point out that over the next few weeks, I'm going to have to spend thousands of dollars repairing my home, so I hope that's a consolation prize for you. And that, Allison, is what's up.

[...]

Southwick: What is a SPAC, aside from an acronym resulting in an abomination of sound? Well, it stands for Special Purpose Acquisition Companies, but what is it? How does it work? Why is everyone from Bill Ackman to Serena Williams, cuckoo over them right now? Joining us to answer those questions and more is Bill Mann, Senior Analyst here at the Motley Fool. Hey, Bill.

Mann: It is a terrible sounding word, isn't it?

Southwick: I know, and I was like, "Well, maybe it could be pronounced like, 'Spark.'"

Mann: Spark, yes exactly.

Southwick: If I wanted to be taken over the pond, I could be like, "Well done."

Mann: It's like the opposite for the word murmur, which makes me happy every time I hear it, every time I hear the word SPAC. [laughs]

Southwick: Well, guess what? [laughs] We're talking about SPACs, we're not talking about murmurs. laughs]

Mann: We're not talking about murmurs. [laughs]

Southwick: All right. So we're just going to have to get over this.

Mann: We're going to be alright.

Southwick: We're going to be fine. The quickest definition of a SPAC is another way to take a company public, but it's so much more than that. According to the Wall Street Journal, so far this year, an average of five new SPACs have been launched each business day, which is bananas.

Mann: Kind of a lot.

Southwick: Kind of a lot. We thought, Bill, that we would have you on to talk us through a little bit of the nuts and the bolts of what a SPAC is. I promise I will not say it like that every time, and then just your general thoughts and feelings on how individual investors should approach them, or think about them. Bill, let's say one morning I wake up and I'm like, I want to create a SPAC. What am I going to do?

Mann: Basically, a SPAC is, you can almost think of it as a promise of an IPO. We're going to call it ALISPAC. ALISPAC is a Delaware corporation, and you're going to try to raise, and the averages have been somewhere between $40 million, which I know you have, to $800 million, which means you might want to go talk to some other people too.

Southwick: So I raise this money, and I start a shell corporation.

Mann: That's right.

Southwick: Again, based in Delaware, ALISPAC.

Mann: Yeah. ALISPAC's based in Delaware.

Southwick: Absolutely, of course. I'm pretty sure this is about me making money, and they called them also, whenever you see a SPAC, also called a blank check company. In every article you read about the basics of SPACs, it's going to be SPACs, also called a blank check company. Why is it also called a blank check company?

Mann: It's such a good definition. You remember when you got your first checking account, and they gave you the checkbook, and you have to write in all of the information, write your address, and things like that? A SPAC is essentially the same thing. It is a bank account that is looking for a company to merge with, so you have raised the money, and so what you have, and it's usually either from one year to two years, a period of time in which you are now as the sponsor of ALISPAC going to go out and you're going to go look for a company to merge with. When you merge with that company, that company gets the money that you have in the bank account. You as the sponsor of ALISPAC, get a component of the company itself, the new company. So you will get a reward for matching the two, and the company will get the money. It's a way for a company that is not public to raise money, and at the same time, take over a ticker, essentially, it becomes a publicly traded company.

Southwick: Then let's say I've convinced Bro to be one of my investors. Because I've read there's a lot of really appealing parts of a SPAC for an early investor like Bro. What are some of the benefits to him of investing in ALISPAC?

Mann: Well, so basically, he would get to be on the side of the sponsor, first of all, as someone who is coming in very early. We're talking about before the SPAC itself goes public.

Southwick: Okay.

Mann: The SPAC itself is whatever assets you are bringing to the table, and you do have to bring something as the sponsor. Doesn't have to be a lot, but you are in fact taking a little bit of risk. Bro comes in, says, "Sounds pretty good, ALISPAC. I saw what you did with ALISPAC 1, so this is ALISPAC 2. I'm willing to bet that you, as the sponsor of this SPAC, are going to be able and go out to find a company that would like to be public, and I'm going to be able to benefit that way, because I will own shares at a reduced rate, and we're going to take a company public, and we're going to end up owning part of that company." But the promise is, until the point in time in which they've identified the company, all that's being bet upon, is on your skill to go out and not only find a company that wants to be public, but to negotiate a good deal.

Brokamp: I, as the investor, I'm not investing in a company, I'm investing in Alison's ability to make money with this.

Mann: That's exactly right. Exactly. Once the SPAC goes public, that would be, let's make me just the individual investor out there. I look at ALISPAC 1, which turned into this little company called Google, maybe you've heard of it, or whatever happens to be, and I say, "Well, she did a really good job with that one, so I think she's going to do a pretty good job with ALISPAC 2. So I am going to invest in what is essentially a bank account, that has a promise attached to it, and that promise is that the sponsor is going to go out and find a company to merge with."

Southwick: So I think something I'm a little confused about is the order in which things happen. I create ALISPAC, and then I go find investors. ALISPAC 2, sorry, because I've already proven myself. I create ALISPAC 2, Bro gives me money, gives ALISPAC 2 money, essentially trusting me to find a company to acquire. Is ALISPAC 2 already public, or do I acquire the company and then go public?

Mann: You will then take ALISPAC 2 public. ALISPAC 2 will have a ticker symbol, but ALISPAC 2 won't have any operations whatsoever. All that will happen is that money will sit in an interest-bearing trust account, essentially, and it will stay there and you would be paid interest. You guys remember interest, back when such a thing would happen, but it will in fact be paid interest, and then you as the sponsor will be in the process of going out and looking for a company to invest in. Now what's really important to note, is that the money that's been raised that goes into the trust, you can't touch. I know, bummer, right? But it is only there for the purpose of being merged into a company that would like to go public, and this is really important because this is actually to me a little bit of the risk of what SPACs are. Because a SPAC, people think of it as a way to get in on a company before it goes public. 

People are very excited about IPOs, well, this is pre-IPO. But in some ways, when you think about what the SPAC is, it's a lot of pressure on you as the sponsor to go and find something, because you are having to pay out of your own pocket whatever operating expenses that you are generating, and that's where Bro would come in, but that's not where I would come in as someone who holds shares in the SPAC, you and Bro have that risk. But then I have the risk at the end of the day that you are going to go find anything, let's just say you're at month 18, month 19, you're starting to feel the pressure, and none of the companies that you have been interested in merging with, you haven't been able to agree to terms. You might want to be just looking for anything, because you, Alison Southwick, as the sponsor of the SPAC, of ALISPAC 2, would like to get paid.

Southwick: Then, I believe also that there's some outs for investors as well, like if I don't find a company to invest in, then my investors get their money back. Is that also how this works?

Mann: Yes, again, assuming that interest ever existed, again, that money is sat in a trust account and it generated some interest. They're usually priced at $10 a share, you would get $10 plus whatever interest back, or at the end of the day, and a number of SPACs that have been around for a while have actually done this, they could put it up to a shareholder vote and the shareholders can agree to extend the life of the SPAC, but you can't go more than two years with original authorization. You could come back and say, "Well, we've done the best we could. We're going to go a little bit longer," and the investors, which would be me, as an outside shareholder, could vote. But otherwise, once the SPAC term runs out, the money just gets returned.

Southwick: Then there is Bro level investor, but then there is also you level investor?

Mann: Exactly.

Southwick: Can you explain the difference between Bro as an investor?

Mann: Bro would be on the side with you as a sponsor, so we'll take Bill Ackman's SPAC. It's actually his company, then another one, called Tontine Holdings. You'll see PSTH, which is -- my gosh, what does Bill Ackman's --

Brokamp: Pershing Square.

Mann: Thank you. Pershing Square.

Southwick: I'm still hooked up on Tontine.

Mann: Tontine, isn't that great?

Southwick: As in when people put money in and whoever's the last person to die in a war gets all the money.

Mann: That's a good pull. That's what it is. [laughs]

Southwick: I'm still hung up on that.

Brokamp: He just chose that name. It's not literally one.

Mann: It's not literally that. Yeah.

Brokamp: But he is hearkening to that to some degree.

Mann: You all are bearing the risk. You as the sponsor and Robert as a co-investor, are bearing the risk that you won't be able to find anything that you can merge with. That's not my risk as an outside investor. My risk as an outside investor is that you find something that stakes.

Southwick: Okay.

Mann: Right? Or that you don't find anything at all and I get my $10, plus a little bit back and that's the time value of money. That's not a huge risk.

Southwick: Okay.

Mann: It's just you've been sitting on my money for some time.

Southwick: Okay. There are over, if I'm correct here, over 400 SPACs right now hunting for companies to take public. That seems like a lot of boats trolling in the same pond.

Mann: This is really important. Now, every SPAC will tell you what it is that they're looking for. There are SPACs out there that are looking specifically for entertainment companies. There are SPACs out there that are looking for companies in Indonesia. There are SPACs that are looking to merge in with sports-related companies. They're not all quite trolling in the same waters. But if you think about the math, I mean, there's 400 companies that are looking for other companies to merge with and they're all looking for companies that are somewhere between, call it $250 million in market cap, up to $10, $11 billion in market cap. I have a hard time believing that there are 400 quality private companies right now, and that's not even with the funnel getting filled up. More SPACs are going public every single day, I have a really hard time believing that there are that many quality companies out there waiting to go public.

Southwick: Well, let's talk about the company that I'm going to acquire and go-public. Do you want to name this company as well? We're going to acquire, what's that musical instrument behind you again?

Mann: Yes, Euphonium Industries.

Southwick: Euphonium Industries.

Mann: Euphonium Industries. Yes.

Southwick: At ALISPAC too we are focusing on companies in the musical space brass.

Mann: Instruments as a Service.

Southwick: Instruments as a service.

Mann: Instruments as a Service. [laughs]

Brokamp: IAAS? Listen to that. [laughs]

Mann: We are interested in the IAAS space.

Southwick: The IAAS space, yeah. [laughs]

Mann: I've enjoyed working with you all, I've got to admit. I think this may be the end. [laughs]

Southwick: Bill, it's been great having you on. Okay. We are in the IAAS space. This is very exciting. Bro and I have identified, sorry --

Mann: Euphonium Corporation.

Southwick: Euphonium -- [laughs]

Mann: Look, as a sponsor, you're really going to need to sell it a little bit better.

Southwick: I know, I do, so Euphonium. Yeah. I'm not doing a great job here. [laughs]

Mann: We're buying something. [laughs]

Southwick: It's the Uber of instruments. Don't worry about it. [laughs] You're on board. Okay. Rick, as of course, the CEO of Euphonium Industries.

Mann: Sure. Yeah, Euphonium industries.

Southwick: Why does he want to get onboard the ALISPAC train?

Mann: Well, remember, you have raised, call it a $100 million from folks like Bro on the inside, but then also me on the outside. You get to negotiate with him and you are going to merge. As we know from our analysis, Euphonium Enterprises is an industry that could use additional capital because it wants to grow, so you go to Rick and you say, "Hey, look, you are going to be public and not only that, so you will get the money that we have already raised for you. Plus, the process of going public through a SPAC is much easier for a company than going public through an IPO. It's cheaper in some ways and you get to disclose." God, I can't believe this is going to murder people in terms of you're about to lose all of your listeners. They get to use an S-4 filing instead of an S-1. The S-1 is basically, there are all these rules. You can't make any promises. That's the IPO document. The S-4 document? You can promise whatever you want. It's almost like document arbitrage. You get to go public in much different terms than you would if Euphonium Industries was simply holding an IPO.

Southwick: Is the whole S-4, S-1 distinction because the ALISPAC, there isn't really a business there?

Mann: Exactly, you have already gone public under an S-1 so they said, "Okay, well talk about the future," and you're like, "Well, we're a bag of money." [laughs] "What do you want from us?" You've done the S-1 so then the S-4 comes along and the S-4 for Euphonium Industries, because the IAAS market is very exciting, you could say, well, we're going to get into Eastern Europe, we're going to China, we're doing all of these things. You can't say any of those things on an S-1. Did we make that exciting enough that we didn't lose anybody? Yeah, it's true. Like, it's wild, but it's true.

Southwick: Right. The whole less scrutiny, less transparency, less disclosure, that's where me as an investor I'm like, I'm not loving that so much.

Mann: Right. Great for Rick. Yeah, exactly. Again, pile onto that the fact that Alison, as the sponsor of ALISPAC 2, you have the motivation to go out and find something. Rick, the CEO of Euphonium industries, he'd like to get the money and he'd like to get it as cheaply as possible and he gets to disclose less and better stuff. Robert loves it because he is not paying for you going out and searching for things, and there's 400 of them doing this at the exact same time. Right? So when people ask the question, are SPACs a bubble? I don't see how you could look right now and say that they aren't. There are too many of them going out and looking for companies and they all have an incentive to find something and that incentive is not perfectly aligned with your interest as an investor, as my interest in this game that we're playing.

Southwick: When the bubble bursts, who is this the worst for? Because it sounds like Rick can get off pretty cheap, but maybe not. I don't know. I'm kind of losing track of who's what. [laughs]

Mann: Rick will be a publicly traded company and as we have seen in the past, once you are publicly traded company, the market will determine whether you're a good business or not. Rick and Euphonium industries will now have to go through a lot more scrutiny than they did as a private company. Although they get the money, that's pretty good. You as the sponsor get the money and somewhere around 20% of the new business, and I become a shareholder of that business. The question for me is who gets hurt, it's interesting because at the end of the day if the SPAC doesn't find anything, I get my $10 back. But because the SPAC has been publicly traded, we have seen examples where SPACs before they have decided to merge with something, have gone up to $40 and $50 a share. I'm essentially buying shares of something that's only $10 for $50, because I think that the company that they are going to find is so good that I'm willing to take that risk. It's a huge risk.

Brokamp: Wow, that is a huge risk.

Mann: Yeah.

Southwick: Yeah. Can you talk to us maybe specifically about some examples here? Do you have an example of a recent SPAC that was really successful, and went really well, and you're like, "Well, that's textbook, that's nice?"

Mann: I think probably the textbook case for the one that's gone well has been Virgin Galactic (NYSE:SPCE). Virgin Galactic, which the ticker now is SPCE, IPO A, which was Chamath Palihapitiya's first SPAC. He went out and merged it with Virgin Galactic and that's gone quite well. I mean, it's still a company that doesn't yet have revenues obviously. It's a commercial and tourist space flight, but you would look at it and then you'd say, that SPAC absolutely positively fulfilled the promise that it was looking for. There's another one that has recently been named, the company it was going public with, it's called Churchill Capital Corp IV. I mean, all the SPAC names. I mean, they're all like blah-blidi-blah. I think we've gotten the best one yet with ALISPAC.

Southwick: ALISPAC is pretty good, yeah.

Mann: The ALISPAC is OK. Churchill Capital Corporation IV is merging with a company called Lucid Motors and it went as high as $64 a share. Again, $10 of a bank account, $64 a share before the merger, and then it's collapsed to $23 a share. I don't know if it's going to turn out to be a good merger, but if you think about it, the people who bought at the high are already down +50%, and the merger hasn't been consummated. Nikola Motors was another one that came public through a SPAC and that company has essentially collapsed. I think the main thing for people to keep in mind is that SPACs themselves, they're not illegal, they're not immoral, they're not fattening. It's another way for a company to go public. But there are some real things that I think the excitement over SPACs has kind of overlooked a little bit in terms of what the risks are, because at the end of the day, the SPAC isn't going to do any better than the company it ends up buying is going to do.

Southwick: Did I ask you if anyone in this scenario has to be qualified or accredited?

Mann: Yes. They would need to be of an institutional level in order to be able to do so.

Southwick: But then you as the investor in the scenario buying shares were just buying the shares off of the NYSE or someplace else?

Mann: Yeah. Churchill Capital, which we just talked about, IV, is ticker CCIV. I mean, here, I'll buy some right now. Hold on. [laughs]

Southwick: Do it live.

Mann: Done. [laughs] When is this running? Let me make sure that I don't end up having the fall of our Foolish trade trick house. It would take you two seconds to do it. I think, ultimately, a lot of people are excited about SPACs because they feel like they're getting into companies pre-IPO. You just don't happen to know what the company is because everybody gets excited. They all want to know how to get that IPO pop? I see it, so I know somebody's getting it, why not me? But one of the reasons that SPACs exist is that the IPO pop isn't that great for the company. There's this interesting tension, SPACs exist because companies themselves don't love that pop, because that money goes to people who aren't in the business. But investors are interested because they do want the pop. It's an exact conflict with each other. It's just another way for companies to go public. If I sound somewhat withering about SPACs, I'm not. You just need to put them in the bucket in which they need to remain. Which is it's a way for companies to go public.

Southwick: Which I think is what I said at the very top of this interview. We went full circle there.

Mann: We did.

Southwick: Every article, it's just a waiver for companies to go. [laughs] Let go it is, folks.

Mann: It's important to go through all that other process for people to see exactly what it is. Because I think people really, really do. They get people and understandably so. We love the shiny new thing, we love hearing about and dreaming about instantly having our stocks go up 200%, which has happened with IPO pops. But SPACs exists because IPO pops exist quite frankly. It is a response to that, and it's a way to make that less of an issue. It's not going to be your path to instant riches that a lot of people think it is. That I think is the most important thing for people to keep in mind about SPACs.

Brokamp: I was like one thing too, and you can tell me if I'm wrong. But with an IPO, it's always about the company. Now, there are some Wall Street banks that help a company go public, but you never really learned anything about that bank, you don't even really care about that bank.

Mann: Yeah.

Brokamp: But with the SPAC, it starts with the person, in this case, it starts with Alison.

Mann: What doesn't start with Alison, frankly?

Brokamp: But that's true. Yeah, the Alpha and Omega. [laughs] But it's almost like you're investing in the person who is in charge of the SPAC first, and then trusting that whatever company or merger they do, that will pay off.

Mann: I love that point and it's exactly right. You need to be aware of the sponsor's track record and a lot of the sponsors of SPACs right now don't have really great track records for anyone other than themselves. Their own tracker, you hear all the time, XYZ billionaire is launching a SPAC. Well, the XYZ billionaire isn't necessarily a billionaire because he's made a bunch of other peoples billionaires too. It's one of the reasons why we at The Motley Fool, have been interested in SPACs because there are good sponsors, but you need to look for one that not only has a good track record in identifying companies and has a good track record of making money for shareholders. But I think you also need some evidence of a sponsor who's willing to make the hard decision, and this case, the hard decision is allowing yourself to not find anything. I think the hardest decision of all, if you can find those sponsors, you have evidence, at least, of someone who is not just going to go out and push anything upon the public market because they have to. It's a really good point, Robert. I mean, you're right. The single most important thing in ALISPAC 2 is Alison.

Southwick: Which is just how I like it. [laughs]

Mann: This is my favorite conversation ever. [laughs]

Southwick: I think we're all bullish on Alison, [laughs] let's be honest, [laughs] and all of the enterprises, and all of the little pies that have my little fingers in. [laughs]

Brokamp: Something bull-oriented is going on. That's for sure. [laughs]

Southwick: Well, last question. Just for fun, we'll let all of you answer it. I didn't warn you that this was going to come, so it might be hard. Let's say you are a sponsor of your own SPAC, what company would you like to take public?

Mann: Oh, gosh, that's so great.

Southwick: Bro and Rick, ponder too.

Mann: I have an answer.

Southwick: Bill's got an answer? All right. He bought you some time, go forward, Bill.

Mann: I want to bring IKEA public.

Southwick: Okay.

Mann: I want to bring IKEA public.

Brokamp: I was just there this weekend.

Mann: Thank you. Did you get to meatballs? [laughs]

Brokamp: No, I did not. Normally, I do.

Southwick: Then you didn't really go to IKEA.

Brokamp: I was with my vegetarian daughter, so we'll connect that. [laughs]

Rick Engdahl: They have veggie meatballs now too.

Brokamp: Do they? Oh, shoot.

Engdahl: They're terrible. You don't want them. [laughs] But your daughter can eat them while you eat the real thing.

Brokamp: Okay.

Mann: That's right.

Engdahl: If Bill can do IKEA, then I can do Lego, right?

Southwick: Yeah, [laughs] absolutely. [laughs]

Mann: I love that so much. We don't talk enough about how Lego ought to be public. [laughs]

Southwick: Let's start, let's be the change we want to see in the world, Bill. [laughs]

Mann: That's right. [laughs]

Engdahl: I think there is a liability with foot injuries.

Mann: Oh, there's insurance for that.

Southwick: That's true.

Mann: [laughs] You know what? Robert's answer should be Lego's Insurance Company.

Brokamp: There you go. [laughs] Actually, now mine's kind of boring, and I don't even know how national it is, but there is a restaurant here in Northern Virginia called CAVA. That is a Mediterranean type of it, my wife and I love. It's not public yet, but we hope at one point because we would certainly be consider investing in it.

Mann: So good. A Chipotle style process when you go in, yeah, beautiful. Now, I'm hungry.

Southwick: Yeah. Let's go build something. Then we'll be ready to have a little something to eat too. Well, Bill, thank you so much for joining us and explaining SPACs. All I'm walking away with is knowing is that it's just another way to go public, so treat it as such.

Mann: That's exactly it. I can't wait for ALISPAC.

Southwick: That's going to be good. ALISPAC 1 and 2. [laughs]

Rick Engdahl: You're phonemania. [laughs]

Mann: Yeah, that's right, the IS.

Brokamp: Followed by murmur.com.

Southwick: Murmur. I should probably do a quick disclosure here. As always, The Motley Fool may have recommendations for or against the fake and real stocks we talked about here today. Don't buy and sell things [laughs] based on what you've heard from this show.

Brokamp: Don't take any of our advice.

Southwick: None of our advice, or you can go buy some IKEA meatballs. Well, that's the show. It's edited instrumentally by Rick Engdahl. Our email is [email protected]. For Robert Brokamp, I'm Alison Southwick. Stay Foolish, everybody!