Steven Heyer, Chief Executive Officer and Executive Chairman of Haymaker Acquisition Corp. II
SPAC IPOs are getting larger and there is scope for a broader range of acquisition targets, but it will remain critical to have a top-notch operator, a financial expert and a business plan that doesn’t depend on too many promises. That’s according to Steven Heyer, who participated in IPO Edge’s SPAC in Action! – a SPAC Roundtable Featuring Four Experts, available in full form here. Mr. Heyer is a veteran business executive who brought OneSpaWorld Holdings (ticker: OSW) public as CEO of Haymaker Acquisition Corp. The health and wellness company, which operates spas aboard major cruise lines such as Carnival and Royal Caribbean, has been one of the most successful SPAC combinations in recent years, with the shares trading nearly 70% higher (and more for those who kept warrants) since the merger was announced. Steven Heyer and his brother Andrew Heyer, who was President of Haymaker, have subsequently raised $400 million for Haymaker Acquisition Corp. II, which is currently searching for another acquisition target. The full interview is below.
Steven Heyer is Chief Executive Officer and Executive Chairman of Haymaker Acquisition Corp. II. He is also lead director of OneSpaWorld Holdings and serves as a director of Lazard Ltd and Lazard Group. Mr. Heyer has over 40 years of experience in the consumer and consumer-related products and services industries leading a range of companies and brands. He has applied his leadership and analytical skills in a variety of leadership positions across diverse industry groups, including broadcast media, consumer products, along with hotel and leisure companies. Mr. Heyer was the Chief Executive Officer of Starwood Hotels & Resorts Worldwide and President and Chief Operating Officer of The Coca-Cola Company. He also was President and Chief Operating Officer of Turner Broadcasting System, Inc., and a member of AOL Time Warner’s Operating Committee. Among other roles, he is an advisor and director to, and investor in, several private companies, including startups and turnarounds.
IPO Edge: What type of leadership qualities are most important in a successful SPAC?
Mr. Heyer: The most successful SPACs should have a mix of an operator who can see the potential in a business and someone with the financial mind needed to craft a deal. I really enjoyed working with Andy on Haymaker and we’re doing the same thing with Haymaker II. I’ve come to love him even more.
IPO Edge: What kind of company makes a good SPAC target?
Mr. Heyer: You look for a good business that has both growth and free cash flow. It should be differentiated from the rest of the market with a wide moat around the business. OneSpaWorld has all of those features and we were able to get a deal done with a fabulous company. We had almost no redemptions and great enthusiasm for the transaction.
IPO Edge: What are the reasons to do a SPAC versus a traditional IPO?
Mr. Heyer: If the owner wants to take significant money off the table immediately, a SPAC is better. It’s also an opportunity for the owner to roll some of the investment to participate in the upside of a well-performing stock.
However, for a SPAC to succeed, you need trust and motivation on both sides. That’s how we got a friendly, fast negotiation with OneSpaWorld.
IPO Edge: Is there a size limitation for SPAC IPOs? What’s helping them get bigger?
Mr. Heyer: We raised $400 million for Haymaker II but it could be a billion dollars. The issue is that you’re probably looking for a middle market deal, so you don’t need that much in the SPAC IPO. You’re not going to raise $5 billion.
With a more successful track record, you can attract investors who want to bet on your team before the target is known.
IPO Edge: How have SPACs been perceived over the years?
Mr. Heyer: If you go back 20 years, SPAC was a dirty word. The reason is that people were using them to line their pockets. They were being bad stewards. Even recently, we had a handful of investors who had a knee-jerk negative reaction to a SPAC because of that history. But with more successful deals, attitudes are changing. It’s evolved from being a niche vehicle to becoming a real asset class.
IPO Edge: You talked about cash flow. Could a SPAC deal be done with a fast-growing company that’s not yet profitable?
Mr. Heyer: I would do it if the growth story were compelling enough and the potential for meaningful profit creation was clear. The expectation needs to be that the business can float on its own and doesn’t hinge on a dozen promises or flawless integration. At some point it stretches credibility.
John Jannarone, Editor-in-Chief