Zukin Certification Services (“ZCS” or “Zukin”) is now providing the essential SPAC financial advisory service called for in the SEC proposed regulations, the “Zukin Reasonable Basis Review Service” or the “Zukin RBR”. The Zukin RBR is a financial due diligence service that reviews a target’s financial projection adding an additional level of diligence by a third-party expert.
Disclaimer: Zukin does not provide fairness, valuation, or projection opinions in De-SPAC transactions. The Zukin RBR report summarizes a review of projections and their underlying assumptions, each of which have been provided by management. While Zukin is a projection expert and is prepared to consent to having a Zukin RBR Report included in SEC filings, such report represents a summary of financial due diligence, for example as called for under the proposed SEC SPAC regulations and is not investment advice.
I am proud to introduce the launch of the Zukin Reasonable Basis Review Service equipped with the Z-SPAC Readiness Certification. By creating the first SPAC financial due diligence firm of its kind, we are responding to the needs of the modern, evolving SPAC marketplace. Our mission is to provide critical services that underpin De-SPAC transactions going forward ultimately resulting in an improved and sustainable SPAC marketplace.
As the Co-Founder of Houlihan Lokey Howard & Zukin (“HLHZ,” now “Houlihan Lokey”; NYSE: HLI) the central theme of my 40-year plus investment banking and financial advisory career has been creating fundamental financial due diligence services with my world-class teams that improve the underpinning of financial transactions. The Zukin RBR Service should serve to strengthen our financial markets, to the benefit of investors, sponsors, and boards of directors.
We look forward to having the opportunity to serve you.
Today sponsors should consider the following:
Zukin Certification Services is the financial due diligence affiliate of Zukin Partners, a boutique financial advisory firm founded by Jim Zukin, Co-Founder of Houlihan Lokey and comprised of a noted team. Vetting projection models, analyzing their assumptions, and determining their reasonableness is a core competency of Zukin.
The Zukin review of management’s projections (the “Zukin RBR”) and their underlying assumptions is Zukin’s lead SPAC financial due diligence service. In 2021 when SPACs were reaching their historic peak, Zukin challenged itself with the support of others to introduce innovative advisory services to underpin De-SPAC transactions going forward.
Zukin considers achieving a state of public company readiness on the part of the target company to be the first category which needs addressed as part of the process of delivering the RBR report. Zukin has developed a proprietary readiness framework of more than 20 components. The Zukin Reasonable Basis Review Report will identify the financial items management has chosen to be projected, the period to be covered, and the manner of the presentation to be used. It will provide a detailed review of the process.
We bring together a cross-disciplinary team to mirror the needs of our clients as they relate to the review of future financial performance. We are proud to play our essential oversight role.
The Zukin RBR service provides SPAC boards with a review of the target company’s projections and underlying assumptions based on the net available capital called for at De-SPAC. The scope includes a review of public company readiness as part of the projection review process where readiness can be independently certified.
Zukin provides their findings in a preliminary report upon request that will be made available for inclusion in the proxy. A final report will be provided at the close of the business combination.
The Zukin RBR will identify the financial items management has chosen to be projected, the period to be covered, and the manner of the presentation to be used.
Specific financial items subject to review will be revenues, and net income (loss) as well as other items as provided by management. Earnings per share projections will be provided based on scenarios provided by management that reflect different assumptions as to the issuance or redemption of shares.
When analyzing the assumptions underlying a financial projection, we start with the purpose of the projection, the tenants of the business plan, and analyze industry size, growth rate, risk factors, and the dynamics of the subject company. Competitor’s assumptions, current, and future market share forecasts play a critical role.
Industry experts and reports may be used by management and Zukin to review a variety of assumptions and identify material risk factors.
The Zukin Readiness Framework allows us to evaluate the state of public company readiness necessary to achieve projections
I have such confidence in the quality of everything Jim does that we will be offering D&O insurance for SPACs and plan to charge significantly lower premiums for SPACs with a Z-SPAC Readiness Certification than we will for SPACs without one.
Leave it to Jim Zukin, the grandfather of fairness and solvency opinions, to enter the SPAC market with a new and much-needed professional-services solution to respond to issues raised about target-company projections and readiness.