How SPACs are Leveraging Workiva

June 24, 2021

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In this podcast of the SPAC series, Nina Kelleher, a director in EisnerAmper Digital, and Josh Gertsch, a director of product marketing at Workiva, discuss how Workiva has established itself as a go-to solution for SPACs, ways they simplify the overall process, including reporting and filing obligations, as well as transition to maintaining a strong internal control environment once the de-SPAC phase occurs. 


Transcript

Nina Kelleher: Hello and welcome to EisnerAmper's Podcast Series on Special Purpose Acquisition Company, otherwise known as SPACs. I'm your host, Nina Kelleher, and today I'll be speaking with Josh Gertsh. Josh is a Director in Product Marketing at Workiva. Workiva is a cloud-based connected and reporting compliance platform. He previously hosted a podcast on discussing the recent SEC guidance related to the accounting of warrants by SPACs.

In this podcast, I'd like to focus on how Workiva has established itself as a go-to solution for SPACs, and ways they can simplify the overall process, including reporting and filing obligations, as well as maintaining a strong internal control environment. Josh, considering the amount of SPACs that have taken place over the last year or so, can you provide some insight how Workiva stepped up to be an attractive solution to these companies?
Josh Gertsh:Hi Nina. Thanks for having me, excited to be here, and I appreciate the opportunity to be on a podcast with you guys. I think the whole SPAC boom has been quite interesting because if you look at pre-2020, Workiva, I wouldn't have said had a ton of SPAC clients. I mean, we had a handful, but it really wasn't as much of an issue. We were more focused on traditional IPOs and kind of helping those types of vehicles to go public.

But now that we kind of in this post-2020 era, I would say that, that number of SPACs that we've been involved with has increased substantially. There's been a huge increase in demand. It's really caused us to have to focus on our business and make sure that we can support that growth. And so our product was ready to go to handle the registration statements, the reporting that they needed to, but what we've had to kind of build out and to meet this demand was our services for growth, our customer service team, our implementation team, and our support from partners. We really had to look at that and upscale that, and invest in that to be able to support this big boom that's happened over the past year.
NK: So we know that SPACs provide the ability for companies to go public in a much faster way than compared to the traditional IPO route, but there's still quite a few reporting obligations that must be adhered to. Can you talk about what some of these requirements are from a filing perspective, and ways that Workiva helps them file a timely and fast track their way to a public company?
JG: Yeah. Definitely we can. I think there's two focuses or two steps in a SPAC. And we're able to help with both of those. The first step in a SPAC is actually taking that shell company public. And so you'll get an investor who wants to set aside some money to go public, they'll form a shell company and they'll take that shell company public. We help in that process along the registration statement process. So as they file with the SEC to make that shell company public, our platform allows them to create that registration statement and file it. It allows all their advisors, management, everybody to be a part of that process to work in one solution or platform to get that done.

And then moving on to step two, once you have this SPAC shell, that's a public, you now have SEC reporting requirements that you have to deal with. And the shell company may not have a big ICOR for assessment at first until it actually finds a target and acquires them. But regardless of ICOR, you still have to report on a quarterly and annual basis.

So the Workiva platform lends itself to helping with that solution. It has built-in XBRL. It allows you to do all your financial statement preparation and filing in that system that helps those SPAC entities really meet the requirements that they need to conform with those new regulations that they have. And I think the great thing about our platform is when you get into SEC reporting requirements, there's a lot of information that you have from reporting that can be applied to other areas in your business, whether it's ESG reporting or GSR reporting or any other types of reporting, where you have financial information or even non-financial information, that platform allows you to link all that reporting up so that, all that data is consistent across your reporting platforms, your reports, and it helps you avoid any errors or inconsistencies that you might have.
NK: To further that point, right? It seems like Workiva can really streamline the reporting and filing process, but you touched upon the flexibility of the tool. Can you talk a little bit more in depth about how Workiva can be leveraged to help SPACs after the target company's been identified?
JG: So the big thing it can help, after that, that step two of that SPAC process, where they identify a target and go out and acquire them, all of a sudden previously they had these annual and quarterly reporting requirements, but the, all they had sitting in that shell company was cash. So now they've gone out and they've acquired a company. And so rather than maybe doing a few pages of reporting on that shell company, now it can be expansive. It can probably go from 20 pages to a hundred of information that they need to have around financials, disclosures, MDNS it really has to be broadened out, risk factors, all that has to be built out.

Again, that Workiva, our solutions enable you to when that happens and you have to be ready to make that shift and expand it quickly, that platform allows multiple users, multiple types of users to get in, to make those changes, whether they're lawyers or accountants. It also helps connect the data from your system, so you're not having to gather and organize that stuff manually.
NK: Can you talk a little bit more about the SOX platform and ways that it might be able to link to other Workiva platforms?
JG: Yeah, yeah. So again, once that target shell, that target SPAC company acquires somebody, all of a sudden they have to be SOX compliant. Most likely there are some exceptions, and if they meet them, they can avoid it, but effectively they need to have effective internal controls. And a key piece of internal controls is being able to document or have the documentation around, the design implementation and testing of those controls.

And so the Workiva platform, it allows, everything's kind of within the same platform depending on the reporting solution, but it allows you to connect to that SEC reporting data that you have, or other reporting data that you have, and work on it in a platform. So really just kind of keeps all your data connected. It allows you to hop in work in that space, track your, you need to have a review, prepare a reviewer for a lot of SOX controls, and it allows you to track that digitally. Nothing is manual and you can really kind of focus on the key pieces of control testing rather than all the documentation and data gathering.
NK: Thanks, Josh, that's really helpful. Can you talk about how Workiva continually updates their service offerings in particular as it relates to SPACs?
JG:Yeah, I'd say we do that in kind of two different ways is one, as you continue on this reporting, you're pulling in more and more different types of information. What we want to be able to do is automate that process. So we continue to invest into new ways to connect to source data, whether it's systems or spreadsheets or bank reporting, whatever it is we want to connect into all those things and automate the data gathering. I would say the other thing we're continuing to be focused on is our platform is cloud-based. So we need to make sure our security is up to date. The people feel comfortable with it that we allow this platform to where everyone can work collaboratively, but it needs to be secured. So we continue to kind of invest in those two pieces to help them as they navigate through these different compliance challenges that they have.
NK: Km Do you have any last words for us?
JG:Only thing is this last, this last year has definitely been a doozy and I think it's highlighted some needs and in the financing in accounting organizations, that technology can be a big help. And I think it's worth the investment. So as we kind of alluded to, we think our reporting solutions can help with a lot of those challenges and can really help people focus on the important aspects of their job and not on the gathering and organizing, and all that kind of that minutia manual work that we do. So I think those are my parting last words.
NK: Josh, thank you for this valuable information and thank you for listening to EisnerAmper's Podcast Series. For more information on this and a host of other topics, visit eisneramper.com/SPACS and join us for our next podcast.

Transcribed by Rev.com

About Nina Kelleher

Nina Kelleher is a Director within EisnerAmper Digital with expertise, including planning, executing and leading audits, conducting risk assessments and completing financial statement due diligence.


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