You don’t have to look far to find special purpose acquisition companies (SPACs) seeking to merge with technology-based enterprises that could, in theory, revolutionize the global economy. From electric vehicles to space travel to every business model between these altitudinal extremes, SPACs often promise the world and more.
However, such investment vehicles — which are a recent phenomenon but have origins going back to the tech bubble of the late 1990s — have not exactly delivered the goods. Overall, SPAC returns post-merger largely underperformed benchmark indices so far this year. It got to the point where CNBC recently declared that the SPAC boom is over.
But perhaps it’s a change of ethos that’s needed? If you ask Banner Acquisition Corp., business success depends on the people running the show, which is why this SPAC is seeking a family-owned or founder-led enterprise.
When did Banner Acquisition Corp. IPO?
Generally speaking, investors hailing from any wealth strata appreciate an initial public offering (IPO) because it represents a new opportunity that previously never existed outside the rarefied realm of the private equity industry. However, the Wall Street machinery isn’t quite extending the average investor a favor.
Though changes are steadily occurring, for the most part, traditional IPOs box out regular retail buyers in favor of institutional investors, such as mutual funds. The major institutions underwriting new public issues overwhelmingly prefer to deal with power brokers in primary market transactions — the first time shares of a formerly private enterprise trade hands.
This circumstance leaves regular folks to buy shares at the open market in what’s known as secondary market transactions. While anything can happen between the primary and secondary phases, for hyped-up stock offerings the share price can dramatically swing higher, putting open market buyers at a disadvantage.
To be fair, SPAC-based IPOs have their fair share of risk factors and criticisms, mainly dealing with their dilutive effect from the exercising of warrants. But they also bring positives, in particular democratization of access. Once a SPAC — also called a blank-check firm or shell company — goes public, a retail investor can purchase shares immediately, whether a merger announcement has been made or not.
Interestingly, Bloomberg Businessweek stated that SPACs are the poor man’s private equity funds — a perhaps crude description but an effective one nonetheless. These shell companies, which don’t have underlying operations but instead initiate their own IPO for the purpose of merging with an enterprise that does have a business, provide everyone opportunities usually reserved for the wealthiest and most privileged.
Banner Acquisition will made its debut on the IPO calendar on Sep. 8, 2021, having just priced its offering of 15 million shares at $10 per share. The equity trades on the Nasdaq exchange under the ticker symbol BNNRU.
Banner Acquisition Corp. Financial History
Aside from its $150 million raise, little is known about Banner Acquisition’s intentions for a merger candidate. Therefore, prospective buyers must carefully weigh whether they want to potentially tie up their money for a significant period of time or move onto a different, more viable opportunity. Keep in mind that SPACs usually have approximately 2 years to identify and combine with a private enterprise.
However, the offering isn’t a completely blind one. According to Banner’s IPO prospectus filed with the U.S. Securities and Exchange Commission (SEC), the blank-check firm’s leadership core comprises “an experienced team of managers, operators and investors who have played important roles building and growing family-owned and founder-led businesses into successful public companies.” As well, the team “has experience operating and investing in a wide range of industries, bringing a diversity of perspectives as well as valuable expertise.”
Significantly, Banner’s prospectus states that it seeks a business combination with a company commanding an “enterprise value range of $500 million to $2 billion.” Though the leadership team makes clear that it’s not limiting itself to any particular industry or geographic region, it highlighted the “healthcare, education and business services” industries. Also, a possibly important clue is that it prefers a corporate candidate with “strong historical earnings that is essential to the United States economy.”
Not coincidentally, the word “family” appears 35 times in Banner’s prospectus with the SEC, indicating a clear desire for the SPAC to combine with an organization with strong values and a personally vested executive board.
Christopher Christensen serves as chairman of the board for Banner. Imbued with extensive experience in the broader real estate and healthcare infrastructure industries, Christensen serves as the executive chairman of The Ensign Group (NASDAQ: ENSG), a specialist in the skilled nursing sector.
In addition, during Christensen’s time as CEO of Ensign, he oversaw the company’s spinning off its real estate assets into CareTrust REIT (NASDAQ: CTRE) and Ensign’s home health, hospice and assisted living assets into the Pennant Group (NASDAQ: PNTG). Therefore, subtle signs point toward a merger candidate operating in a similar capacity.
Banner Acquisition Corp. Potential
First, if Banner succeeds in combining with a family-based enterprise, it could overcome some of the negative print regarding SPACs. Since the leadership team wants to protect the integrity of the enterprise brand, it might not engage in short-term tactics — like dumping shares following a hot IPO debut — that would jeopardize longer-term reputation.
Further, research from high-level entities like Credit Suisse (NYSE: CS) confirms that family-owned companies tend to outperform the wider market, irrespective of the firm’s region, sector or size. This dynamic might relate to the earlier point that family businesses work hard not only to boost their operations and profitability but also to protect their image.
Moreover, should Banner combine with an assisted-living company, it would epitomize a move into one of the most relevant market segments in memory. According to the Pew Research Center, the pace of retirement among the baby boomer demographic accelerated in 2020, likely in part due to the COVID-19 pandemic sparking mass-scale job losses.
With millennials preoccupied with starting their own families, demand for assisted living facilities will almost surely rise, auguring well for Banner’s potential merger candidate.
How to Buy Banner Acquisition Corp. (BNNRU) Stock
Although the narrative for BNNRU stock is an intriguing one, investors ought to be aware of the risk factors involved with SPAC-based IPOs. True, acquiring shares now gives you exposure to a well-oiled management team with a track record of delivering profitability for shareholders. At the same time, each venture is different.
Particularly, if Banner fails to find a merger target or identifies a company well outside the expected industries, the research you put into BNNRU stock will be neutralized. Thus, you should only wager with money you can afford to lose.
That said, acquiring SPAC shares is easy if you already know how to buy stocks — the process is identical. For a refresher, follow the steps below.
Step 1: Pick a brokerage.
Due to intense competition and increased demand for personal investing endeavors, the best brokers today distinguish themselves on access and mobility rather than platform cost. Below are top brands to consider.
- Best For:Active and Global TradersSecurely through Interactive Brokers’ website
- Best For:Traders of All Levelssecurely through Moomoo's website
- Best For:Mobile Userssecurely through Plus500's website
- Best For:Momentum traderssecurely through Centerpoint Securities's website
- Best For:Intermediate Traders and Investorssecurely through Webull's app
Step 2: Decide how many shares you want.
No matter what kind of IPO you decide to participate in, they all carry a measure of unpredictability. Therefore, choose a balanced share count with BNNRU stock, one that facilitates upside but also mitigates risk exposure should your thesis not pan out.
Step 3: Choose your order type.
Before placing your first order, familiarize yourself with these market concepts.
- Bid: The bid is the price you offer stock to the broker.
- Ask: The ask is the broker’s requested price if you’re on the buy side.
- Spread: Mainly the bid-ask price variance, the spread also signals market liquidity and risk. Tighter spreads imply higher liquidity and lower risk due to robust participation, while wider spreads entail higher risk due to lower volume.
- Limit order: Trade requests at a predetermined price, limit orders offer total control but no execution guarantees.
- Market order: Conversely, market orders guarantee fulfillment but only at the prevailing rate, which may vary considerably.
- Stop-loss order: A defensive tool, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders also provide automated protection but only at a predetermined price. However, such orders carry the same non-fulfillment risk as limit orders.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.