Structure
Promote
The sponsor's founder stake expressed as a share of the combined company, the compensation for putting the deal together.
Also written: sponsor promote, the promote
The promote is what the sponsor earns for forming the vehicle, marketing it and finding a target. At the conventional 20% it is a substantial transfer of value from public shareholders to the sponsor at closing.
Structures that trim the promote, tie it to performance hurdles, or defer part of it into an earnout have become more common as investors pushed back on the standard terms.
Related terms
Founder shares
The class of shares the sponsor buys before the IPO at nominal cost, typically 20% of the post-IPO share count.
Dilution
The reduction in each share's claim on the combined company caused by founder shares, warrants and rights.
Sponsor
The entity that forms the SPAC, funds its costs, and holds the founder shares that pay off only if a deal closes.
See the term in the wild: the screener shows trust size, per-share value and deadlines for every U.S. SPAC, and each profile links to the filings the numbers came from.
Definitions describe market practice and are not investment, legal or tax advice.