Mother-son duo conquer Wall Street trend — from Sarasota

A mother-son financial services duo, mostly from a beachfront compound in Sarasota, have become some of the most sought-after dealmakers in one of Wall Street’s hottest tickets: blank check companies.   

The pair, Betsy and Daniel Cohen, have invested — and made — millions of dollars utilizing the private-to-public channel over the past five years, becoming something of trailblazers in the field. In doing so, the Cohens are a living example of how the business axiom to hyper-focus on what you know, and not get distracted by bright shiny objects, is a successful strategy. “We do what we know and we know this field very well,” says Betsy Cohen, 79. “We see over time what’s successful and over time what isn’t.”

One big recent success comes from Payoneer, a global e-commerce payments company that handled $44.4 billion in transactions in 2020. The Cohens, through a blank check company they founded, FTAC Olympus Acquisition Corp., merged with New York-based Payoneer earlier this year. The deal, including some $750 million raised by the Cohens, valued Payoneer at $3.3 billion, according to public filings. That’s eight times greater than the company’s 2020 revenue, $345.6 million — a high rate of return for blank check companies.

Word of the Cohens’ success has traveled quickly. The duo has been featured in national business publications and on podcasts for insight into their success and blank check strategies. “Some people who turned us down years ago are now calling us up today saying ‘lets do a deal,’ because we’ve kept at it,” says Daniel Cohen, 51.

Blank check companies are officially called SPACS — special purpose acquisition companies. A SPAC is a shell corporation listed on a public stock exchange so it can acquire a private company that then becomes public through the SPAC. The idea is to take companies public that might otherwise have some issues launching a successful a IPO, such as debt or lack of sustained revenue. A SPAC, raising funds without knowing what company it will acquire or merge with, has two years to use the funds in most cases.

It can be as risky as it sounds — and on top of that, given the meteoric rise of SPACs in the last 15 months, bubble chatter has begun to percolate. U.S.-based SPACs raised $87.9 billion in the first quarter, according to SPAC Research, which, in three months, bested all of 2020, when blank check firms raised a then-record $83.4 billion. More bubble-esque growth: In 2020, there were 248 SPACs that went public — more than the 244 SPACs that went public in the preceding 12 years, according to research form SPAC Analytics. Through early June, another 331 SPACs had gone public, the research firm reports, already exceeding 2020 by 33.5%.  

Some Wall Street stalwarts have shunned SPACs, citing the risk in the blank, or blind, investment approach. In late April, during the annual Berkshire Hathaway annual meeting, Warren Buffett and his top official, Charlie Munger, criticized SPACs — noting there was a reason these investments had been mostly ignored for years. Buffett said some SPACs were taking advantage of amateur investors and making pie-in-the-sky promises. “You stick a famous name on it and you can sell almost anything,” Buffett said at the meeting, alluding to celebrities, from Shaquille Neal to singer Ciara, recently getting behind SPACs.  

Long time

The Cohens, even in the face of those inherent risks and possible market saturation, remain steadfast on SPACs. They’ve launched nine SPACs since 2015, including three in 2020 and three so far this year. “We are very disciplined,” Betsy Cohen says. “We only project something that is grounded and not just something we dream up.”

Also, few others have the Cohens’ SPAC track record, something Betsy Cohen attributes to her long career of going her own way and sticking at something until it becomes a hit. That’s how she’s lived her entire life, going back to when she gradated from the University of Pennsylvania Law School in 1966. A year later, in landing a teaching gig at Rutgers Law School, Cohen became the second woman law professor at an East Coast school — following Ruth Bader Ginsburg. “We try to look at opportunity as it evolves,” she says. “We try to look five to 10 years ahead and try to understand where trends are moving. That led us into the SPAC area.”

Their SPAC niche is in taking financial technology firms, or fintech  companies, public, such as Payoneer. That focus follows the stick-with-what- you-know mantra: the Cohens, including Betsy Cohen’s husband Ed and another son, Jonathan, have operated scores of businesses. But the Betsy and Daniel Cohen partnership has concentrated heavily on financial services. The list includes The Bancorp, a Wilmington, Delaware-based virtual bank for small and mid-size companies Betsy Cohen founded in 1999. The Bancorp, where Daniel Cohen remains chairman, posted $279.52 million in revenue in 2020.

The concentration on fintech is another example of the Cohens zigging while others zag, given SPACs run the gamut in sectors, from airlines to snack companies to gambling websites. “When we started this we were told that fintech companies weren’t good companies to put into SPACs, says Daniel Cohen. “Now it seems like the best performing ones are fintech companies.”

Betsy Cohen, hearing some of the SPAC doubters, says not all SPACs are created equal — some, for example, aren’t as deeply researched as the nine she and her son have launched. “If you stick to what you know, something that’s in your ballpark, then bravo,” she says. “But that doesn’t always seem to be the case.”

Daniel Cohen adds that the knowledge to create a SPAC and find a company to take public is both nuanced and specific. “We all know what good companies are,” he says. “That doesn’t mean everyone should start (a SPAC) to take companies public. We’ve been working at this and building an infrastructure on it for more than five years now.

Including the Payoneer deal, many of the duo’s SPACs, including the first one, where a Cohen-led SPAC merged with payment processing firm CardConnect Corp., have been big hits. On CardConnect, a SPAC the Cohens dubbed FinTech Acquisition took the firm public in July 2016 at $10 a share. First Data Corp., in an exit that generated a 50% return, bought the company in 2017 for $15 a share.   

Remain agile

While not as prolific as the Cohens, several others in the region have created SPACS or gone public through SPACs. Software and technology consulting firm AgileThought, founded in Tampa in 2004, was taken public in May through a SPAC based in Mexico, LIV Capital Acquisition Corp. While a Dallas-area company acquired AgileThought in 2019, the company maintains a large employee base in Tampa. After the deal closes, according to a statement, company officials expect AgileThought will have a market value of some $491 million and be listed on the Nasdaq under the ticker AGIL.   

In 2020 Clearwater-based marketing firm Digital Media Solutions went public through a SPAC with Leo Holdings. Leo Holdings’ board includes several business luminaries, including Sun Microsystems co-founder Scott McNealy; Yale University official and management professor Jeffrey Sonnenfeld; and Lori Bush, former CEO of multilevel marketing skincare firm Rodan + Fields. Digital Media Solutions now trades on the NYSE under the symbol DMS; it posted $332.85 million in revenue in 2020.

On the SPAC creation side, Tampa-based SCP & Co., formerly Skyway Capital Partners, formed a blank check company last year. The plan with that entity, SCP & CO. Healthcare Acquisition Co., is to raise up to $200 million to take a digital health care firm public, according to public filings. Tim Main, chairman and former CEO of St. Petersburg manufacturing giant Jabil, is among the board of directors on that SPAC. And more recently, Tampa-based investment firm Anzu Partners raised $420 million for a SPAC seeking early stage industrial and life science technology companies.

Work from home

The Cohens run their SPAC businesses from their Casey Key home, a 1957 Paul Rudolph-designed house Betsy and Ed Cohen bought in 1981 and restored. The Cohens also maintain homes in Maine and Philadelphia, where they work out of, too.

Neither mother nor son — Betsy Cohen, who turns 80 Oct. 29 and sometimes puts in 14-hour days — intend to slow down soon on SPACs. Betsy Cohen, for example, has been planning a mid-June trip to Israel to meet with several potential partners. “We see us bringing more great companies to market over the next six to 12 months,” says Daniel Cohen, adding the target is four to five a year. “And we see a pipeline of selectively doing that over the next five years.”

‘We try to look at opportunity as it evolves. We try to look five to 10 years ahead and try to understand where trends are moving.’ Betsy Cohen

The biggest worry the Cohens have is they will miss something when researching the next business to take public through a SPAC. The Cohens obsess over financials and other reports and meet often with the firm’s management team before committing to a SPAC acquisition. It helps, says Betsy Cohen, that after decades in the field they know a lot of key players. “We have to scrutinize everything as much as possible,” says Daniel Cohen.  

The pair notes that the unusual makeup of their partnership, where father-son duos dominate Wall Street, can also be a good conversation starter. “We think a lot alike,” says Betsy Cohen, “but we like to do different parts of the project.” Daniel Cohen, following his mom, quickly quips: “She likes to work and I prefer not to do the work.”