Quadro Acquisition One Corp. (NASDAQ:QDRO) has entered into a definitive agreement to combine with Global Growth Companies at an enterprise value of $3 billion.

Global Growth operates a diverse set of companies in the healthcare, financial services and communications fields.

The combined company is expected to trade on the Nasdaq once the deal is completed by the end of 2024.

Transaction Overview

Quadro has about $16.9 million in its current trust after seeing 93.2% of shares redeemed in earlier extension votes and has not yet supplemented this with additional committed financing.

Global Growth shareholders are to be issued 208,715,500 Class A shares as consideration in the deal and this is to be adjusted up or down based on the extent that the target’s 2023 fiscal year EBITDA deviates from about $142.4 million.

The SPAC must maintain more than $5 million in cash available in order for the deal to close and Global Growth is to pay Quadro a $2.5 million termination fee should the deal not close by its June 30, 2024 outside date, provided Quadro is not found to be in breach of the combination agreement.

The parties have not yet released an investor presentation, but Quadro’s profile page will be updated once additional information is made available.

Quick Takes: Four of the seven SPAC deals announced so far in 2024 – include the last three in a row – have been by SPACs that initially IPO’d back in 2021.

For SPACs that listed in early 2021, we are now entering the period that will provide the last chance for them to complete a combination before they stretch past the three-year expiration date for SPACs.

Some SPACs are already testing that rule as regulators tend to provide a bit more slack to those that have a pending deal in hand. There are already five SPACs still kicking with a deal in hand despite the fact they initially listed in late 2020.

Quadro is only the 19^th oldest SPAC in the announced column, but of course it just started its journey in getting an announced deal to close this week. Its target may not be the simplest business to get through the process as well.

Global Growth is a highly diversified conglomerate made up of about 120 companies with 7,000 employees across 20 countries. Its operations are so diverse, in fact, that it gives a mostly high-level accounting of the industries it is involved in.

In healthcare, its companies provide software to general practitioners and other tools to ease back office burdens on professionals in the field. This was the first field that Global Growth’s founder Greg Lindberg got into as a 21-year-old in 1991.

He began publishing a medical industry newsletter that grew into a series of media publications before expanding into healthcare accreditation, collectibles pricing and business technology.

Although it was one of the group’s first areas of expansion in the late 1990’s, the collectibles group has kept with recent trends by including gaming assets and NFT spaces. NFTs have gone through big swings up and down in recent years, but appear to be undergoing something of a revival now alongside a rebound in crypto prices.

But, that activity does not necessarily mesh coherently with the group’s activities in healthcare enterprise software when trying to pin a valuation to this disparate group of companies.

The picture gets still foggier as Global Growth’s companies also provide business management software aimed at mortgage origination, refinancings and serving those debt transactions.

A separate business services group provides communications technology to clients on four continents, not to be confused with Global Growth’s specific communications group.

That provides media analytics and intelligence to publishers and handles the publication of its own trade and enthusiast magazines “Atomic Ranch”, “Cottages and Bungalows”, “Diesel World”, and “Knives Illustrated”.

On the face of it, this is a disparate group of businesses that could use some consolidation or sorting between core and non-core activities. Like his company, founder Greg Lindberg is a bit all over the place as well.

He has authored three books, the first of which “Failing Early & Failing Often: How to Turn Your Adversity into Advantage” carries the Global Growth corporate logo on its cover. His most recent goes from professional to personal self help in “LIFELONG: Quantum Biology, Anti-Aging Science and the Cutting-Edge Program That Will Transform Your Body and Mind”.

In between these two, he wrote “633 Days Inside: Lessons on Life and Leadership” about fasting and other techniques he developed while serving a sentence for bribery and conspiracy to commit wire fraud. While that conviction was later overturned, a retrial is set to begin on the charges this May.

This drama aside, Quadro is likely like to hear from potential PIPE and public SPAC investors through its de-SPACing process that simple value stories and pure plays are prized. But, the group appears to have something that the market craves above all else right now in actual earnings.

The investment professionals that have steered the Global Growth ship as it vacuumed up all of these subsidiaries have amassed about $5 billion in total assets for the group, according to its website.

If it is regularly turning out the $142 million in EBITDA annually that it appears to expect for 2023, then there is real value in the group.

The fact that the deal’s terms have chosen that EBITDA number as the midpoint at which Quadro will adjust the Group’s 208,715,500-share consideration, also means that it effectively values the company at 14.7x EBITDA.

Investors will have to parse whether that lines up with industry multiples once the parties provide more information on how much of its earnings is coming from which of its disparate branches and whether the group’s legal headaches are worth the risk.