Hudson's Braunstein Sees Advantages in SPACs

Overlooked in the hype about special purpose acquisition companies, or SPACs, is the truism that they are an innovative financial structure that serves a very specific purpose: a superior source of capital for mid-sized companies over the traditional initial public offering process. So says Doug Braunstein, founder and managing partner at Hudson Executive Capital LP and this week’s guest on the Masters in Business podcast.

Hudson has underwritten several successful SPAC offerings, and manages about $1.6 billion. Braunstein’s time as a banker at First Boston, Merrill Lynch and JPMorgan, where he rose to become head of the firm’s global mergers and acquisition department, gives him unique insight into M&A and IPOs. He also served as JPMorgan’s chief financial officer and was a member of the firm’s Executive Committee, working directly with Chief Executive Officer Jamie Dimon.

The SPAC structure has “very significant competitive advantages” over an IPO: It’s a faster, more certain process in terms of pricing and offers a greater degree of flexibility. The disclosures are better as well, including revenue and profit projections, allowing companies to provide investors with more information.

Hudson Executive Capital has had substantial stake in Deutsche Bank AG, which has spent much of the past few decades suffering from scandals, trading losses, and other self-inflicted wounds, since 2018. The bank has new management, and is in the early stages of a turnaround. Braunstein says it is one of the few banks considered a “national champion,” with the potential to grow tremendously from its current $24 billion market cap.

Braunstein also discusses how JPMorgan’s “fortress balance sheet” allowed the firm to take advantage of numerous opportunities during the financial crisis of 2008-09,  acquiring Bear Stearns and Washington Mutual. Braunstein said being CFO of JPMorgan was a “remarkable privilege” and an “awesome responsibility.”

A list of his favorite books are here; A transcript of our conversation is available here.

You can stream and download our full conversation, including the podcast extras on iTunesSpotifyStitcherGoogleBloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Jean Hynes, incoming CEO of Wellington Management. The firm manages more than $1 trillion. Hynes runs the $51 billion Vanguard Healthcare Fund – the country’s largest health care fund.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

©2021 Bloomberg L.P.

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