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MCAP Acquisition Corporation

MCAP Acquisition Corporation

Feb 1, 2021 by Matt Cianci

PROPOSED BUSINESS COMBINATION: AdTheorent, Inc.

ENTERPRISE VALUE: $882 million
ANTICIPATED SYMBOL: ADTH

MCAP Acquisition Corporation proposes to combine with AdTheorent, Inc., a programmatic digital advertising leader using advanced machine learning technology and solutions to deliver real-world value for advertisers and marketers.

AdTheorent’s programmatic platform uses award-winning data science and machine learning (ML) capabilities to deliver advertiser-specific business outcomes for top consumer brands. The company’s proprietary suite of tools, methodologies and vertical solutions maximizes campaign performance and ROI for advertisers, while operating in a privacy-first manner, which has quickly escalated as an essential element for brand marketers worldwide. AdTheorent’s performance focus is centered around ingesting non-personalized data signals and using statistical data for modeling and targeting, representing a growing strategic advantage as regulatory and industry changes reduce marketers’ access to individual user identifiers such as cookies and device IDs.

SUBSEQUENT EVENT – (LINK)

On December 9, 2021, MCAP Acquisition Corporation announced that AdTheorent Holding Company, LLC and its majority equityholder, an affiliate of H.I.G. Capital LLC, have agreed to waive both the $140 million aggregate cash consideration closing condition and the $258.1 million available cash in trust closing condition contained in the business combination agreement (the “BCA”) in connection with the previously announced proposed business combination between MCAP and AdTheorent (the “Business Combination”).

TRANSACTION

  • The business combination values AdTheorent at a $882 million enterprise value and at a pro forma market capitalization of approximately $1 billion, assuming a $10.00 per share price and no redemptions by MCAP stockholders.
  • The transaction will provide a minimum of $100 million of net proceeds to the company, including an oversubscribed and upsized $121.5 million fully committed common stock PIPE.
  • AdTheorent is currently majority-owned by H.I.G. Growth Partners (H.I.G.), an affiliate of H.I.G. Capital, a leading global alternative investment firm with over $44 billion of equity capital under management. H.I.G. will continue to hold a substantial ownership position in AdTheorent.

MCAP Transaction Overview

PIPE

  • The transaction includes an oversubscribed and upsized $121.5 million fully committed common stock PIPE at $10.00 per share anchored by top-tier institutional and strategic investors including:
    • Hana Financial Group and Monroe Capital and/or one or more of its affiliates, along with Palantir Technologies, a global software company specializing in providing enterprise data platforms for use by organizations with complex and sensitive data environments.

SPONSOR SUPPORT AGREEMENT

Concurrently with the execution of the Business Combination Agreement, Sponsor, Parent, and the Company entered into the Sponsor Support Agreement, pursuant to which, among other things, the Sponsor, has agreed to:

  • Forfeit 551,096 of its warrants to purchase shares of Parent Class A common stock issued in connection with that certain Warrant Agreement
  • Take all actions necessary to cause, at the Closing, the entry into the Stock Escrow Agreement among Parent, Sponsor and CST, as escrow agent, pursuant to which, immediately following the Closing,
    • (a) 598,875 shares of New Parent Common Stock held by Sponsor (the “Sponsor New Parent Escrow Shares”) and
    • (b) 551,096 Private Placement Warrants held by Sponsor (the “Sponsor Escrow Warrants”) will be deposited into an escrow account maintained by CST and held and disbursed as follows:
      • 299,438 Sponsor New Parent Escrow Shares will be released to Sponsor if the VWAP of the Class A Common Stock of Parent equals or exceeds $12.00 per share for any 20 trading days within any consecutive 30 trading day period on or before the 3rd anniversary of the Closing.
      • 299,437 Sponsor New Parent Escrow Shares will be released to Sponsor if the VWAP of the Class A Common Stock of Parent equals or exceeds $13.50 per share for any 20 trading days within any consecutive 30 trading day period on or before the 3rd anniversary of the Closing.
      • The Sponsor Escrow Warrants will be released to Sponsor if the VWAP of the Class A Common Stock equals or exceeds $14.00 per share for any 20 trading days within any consecutive 30 trading day period on or before the 3rd anniversary of the Closing.

LOCK-UP

  • Parent and the Holders will enter into a Lock-up Agreement, pursuant to which, among other things, for the New Parent Common Stock held by the Holders to be locked-up for a period of 6 months from the Closing Date.

EARNOUT

  • If, at any time during the period following the Closing and expiring on the third anniversary of the Closing Date:
    • (i) the VWAP of New Parent Common Stock will be greater than or equal to $14.00 for any twenty (20) Trading Days within a period of thirty (30) consecutive Trading Days or
    • (ii) Parent completes a liquidation, merger, stock exchange, reorganization or similar transaction that results in all Parent Stockholders having the right to exchange their shares of New Parent Common Stock for cash, securities or other property pursuant to which the valuation of such shares of New Parent Common Stock equals or exceeds $14.00 per share (the “Earn-Out Target”),
      • Within ten (10) Business Days following the achievement of the Earn-Out Target, Parent will pay or issue, as applicable, to the Blocker Member, each Company Member and holder of an Exchanged Option or Exchanged Unit, an aggregate amount equal to $95,000,000, which such Earn-Out Consideration will be paid, at the sole and absolute discretion of Parent Board, in the form of:
        • (1) the issuance to the Blocker Member and each such Company Member or holder of an Exchanged Option or Exchanged Unit of validly issued, fully-paid and nonassessable shares of New Parent Common Stock valued at $14.00 per share,
        • (2) a payment in cash to the Blocker Member and each such Company Member or holder of an Exchanged Option or Exchanged Unit or
        • (3) a combination of (1) and (2) (the “Earn-Out Consideration”); provided, however, that:
          • (x) no Earn-Out Consideration will be paid with respect to unvested Exchanged Options or Exchanged Units that expired or terminated prior to the date that Parent pays the Earn-Out Consideration to the Blocker Member and the Company Members and
          • (y) with respect to outstanding Exchanged Options or Exchanged Units that are unvested as of the date that Parent pays the Earn-Out Consideration to the Blocker Member and the Company Members, Parent will pay the Earn-Out Consideration to the applicable holder of an Exchanged Option or Exchanged Unit within thirty (30) days following the date on which the unvested Exchanged Option or Exchanged Unit vests, subject to the holder’s continued employment or service with Parent or its Affiliates through such vesting date (provided that such payments must be made prior to the date that is five (5) years following the Closing Date and otherwise in accordance with Treasury Regulation §1.409A-3(i)(5)(iv)(A)).
    • If the Earn-Out Target will not be reached after the Closing and prior to or as of the third anniversary of the Closing Date, the obligations under the earn-out will terminate and no longer apply.

NOTABLE CONDITIONS TO CLOSING

  • Subsequent event – On December 9, 2021, MCAP Acquisition Corporation announced that AdTheorent Holding Company, LLC and its majority equityholder, an affiliate of H.I.G. Capital LLC, have agreed to waive both the $140 million aggregate cash consideration closing condition and the $258.1 million available cash in trust closing condition contained in the business combination agreement (the “BCA”) in connection with the previously announced proposed business combination between MCAP and AdTheorent (the “Business Combination”).
  • The amount available for the Aggregate Cash Consideration shall be equal to at least $140,000,000.

NOTABLE CONDITIONS TO TERMINATION

  • By either Parent or the Company if the Second Company Merger Effective Time does not occur prior to the 6 month anniversary of the date of this Agreement, January 27, 2022 (the “Outside Date”).

ADVISORS

  • Canaccord Genuity acted as exclusive financial advisor to AdTheorent.
  • Bank of America Securities, Cowen and Canaccord Genuity were engaged as PIPE placement agents.
  • Greenberg Traurig and Nelson Mullins Riley & Scarborough are serving as legal advisors to MCAP.
  • Paul Hastings and Kirkland & Ellis are serving as legal advisors to AdTheorent.

MANAGEMENT & BOARD

Executive Officers

Theodore L. Koenig, 62
Chairman and Chief Executive Officer

Mr. Koenig has been the Chairman of the Board and Chief Executive Officer of Monroe Capital Corporation (Nasdaq:MRCC), a business development company, since its formation in February 2011, as chairman of the investment committee of MRCC’s external investment advisor, Monroe Capital BDC Advisors, LLC since MRCC’s initial public offering in October 2012. Additionally, Mr. Koenig is the Chief Executive Officer and a manager of MC Advisors, and the Chairman, Director and Chief Executive Officer of Monroe Capital Income Plus Corporation. Since founding Monroe Capital in 2004, Mr. Koenig has served continuously as its President and Chief Executive Officer. Prior to founding Monroe Capital, Mr. Koenig served as the President and Chief Executive Officer of Hilco Capital LP from 1999 to 2004, where he invested in distressed debt, junior secured debt and unsecured subordinated debt transactions. From 1986 to 1999, Mr. Koenig was a partner with the Chicago-based corporate law firm, Holleb & Coff. Mr. Koenig is a past President of the Indiana University Kelley School of Business Alumni Club of Chicago. He currently serves as director of the Commercial Finance Association and is a member of the Turnaround Management Association and the Association for Corporate Growth. Mr. Koenig also serves on the Dean’s Advisory Council, Kelley School of Business; Board of Overseers, Chicago-Kent School of Law; and as Vice Chairman of the Board of Trustees of Allendale School, a non-profit residential and educational facility for emotionally troubled children in the greater Chicago area. He also holds a certification as a Certified Public Accountant. Mr. Koenig received a Bachelor of Science in accounting, with high honors, from Indiana University and earned a Juris Doctor, with honors, from Chicago Kent College of Law. Mr. Koenig’s depth of experience investing in a variety of transactions as well as his legal background provides our board of directors with valuable experience, insight and perspective.

Zia Uddin, 49
Co-President

Mr. Uddin is currently a Partner at Monroe Capital. At Monroe Capital he is currently the portfolio manager of approximately half of Monroe Capital’s current assets under management through various institutional investing vehicles. He joined Monroe Capital in 2007 and is a member of Monroe Capital’s investment committee. Mr. Uddin also focuses on Monroe Capital’s equity investments, as well as Monroe Capital’s transactions with software, technology-enabled and business services companies. He works extensively with sponsors and non-sponsor businesses and sits on various boards of directors for Monroe Capital’s investments. Mr. Uddin has experience sitting on the Board of Directors for a variety of companies in different industries. Mr. Uddin has over 25 years of management consulting, corporate finance, turnaround and investing experience. Prior to joining Monroe Capital, Mr. Uddin was a Partner and Principal with two middle market private equity funds. Prior to that role, he worked at Arthur Andersen LLP, where he provided management consulting services to a wide range of clients. Mr. Uddin has also had numerous operating roles at middle market companies including Chief Operating Officer, Chief Financial Officer and Chief Restructuring Officer. Mr. Uddin earned his M.B.A. from The University of Chicago Graduate School of Business and a B.S. from University of Illinois. He is a CFA charter holder and is a non-practicing CPA.

Mark A. Solovy, 49
Co-President

Mr. Solovy is currently a Managing Director and Co-Head of the Technology Finance Group of Monroe Capital. He joined Monroe Capital in 2013 and has over 20 years of investing, investment banking, and legal experience. At Monroe Capital, Mr. Solovy is responsible for sourcing and investing in new business opportunities within the software, technology-enabled and business services industries. Mr. Solovy has served as the primary investment professional responsible for Monroe Capital’s co-sponsorship of Thunder Bridge Acquisition, Ltd. and Thunder Bridge Acquisition II, Ltd., where he was involved with sourcing, structuring and financing potential business combinations. Prior to Monroe, Mr. Solovy was a Managing Director in the Palo Alto and Chicago offices of Hercules Capital, where he was focused on venture debt investing in technology companies. Mr. Solovy earned his J.D. from the University of Pennsylvania Law School and his B.S. in Business Administration (summa cum laude) from Washington University’s Olin Business School in St. Louis. Mr. Solovy volunteers as a Chapter Leader for the Wharton Private Equity & Venture Capital Alumni Association and as a mentor with HFS Chicago Scholars.

Scott A. Marienau, 51
Chief Financial Officer

Mr. Marienau is currently the Chief Financial Officer of Monroe Capital’s management company. He is responsible for day-to-day financial and treasury management of the firm’s management company and general partnership entities. Mr. Marienau has over 29 years of experience in accounting, compliance, operations, portfolio management, and structured finance. Prior to joining Monroe Capital in 2020, Mr. Marienau was Chief Financial Officer and Chief Compliance Officer at Crestline Denali Capital, L.P., where he was responsible for financial reporting, fund and RIA compliance, loan administration, and corporate operations. Prior to Crestline Denali, he was a Finance Manager with Antares Capital. Mr. Marienau earned his M.B.A. from DePaul University’s Kellstadt Graduate School of Business and his B.B.A. in Accountancy from the University of Iowa.

Board of Directors

Peter Gruszka, 52
Director

Mr. Gruszka serves as General Counsel and Managing Director of Monroe Capital, where he is responsible for all firm-related legal matters. Mr. Gruszka has over 20 years of experience in private funds, leveraged loans, distressed investments and structured products. Prior to joining Monroe in October 2016, Mr. Gruszka was a Director – Structured Products at Chicago Fundamental Investment Partners, LLC, where he was responsible for structuring CLO transactions, analysis on distressed and special situations investments and general private investment fund legal matters. Prior to Chicago Fundamental and Monroe Capital, he was an Attorney in the finance practice at Mayer Brown LLP, where he represented issuers, underwriters, banks, sponsors and private investment funds in a wide variety of finance transactions. Mr. Gruszka earned his J.D. from Washington University in St. Louis and his B.A. from Duke University.

Thomas J. Allison, 69
Director

Mr. Allison is currently Principal of Thomas J. Allison & Associates, a senior management services firm, Senior Advisor of Portage Point Partners, an interim management and business advisory firm, a director of PTC Alliance Group Holdings, a global manufacturer of steel tubing, and the Chief Restructuring Officer at Inspirion Delivery Sciences, LLC, a specialty pharmaceutical company. From February 2019 to November 2019, Mr. Allison was a director at Novum Pharma, a global specialty pharmaceutical company. From July 2018 to March 2019, Mr. Allison was a director at The NORDAM Group, Inc., an aerospace company. From August 2016 to March 2019, Mr. Allison was a director at Katy Industries, a manufacturer of commercial cleaning solutions and consumer storage products. From September 2018 to January 2019, Mr. Allison was a director of PGHC Holdings, Inc., a restaurant holding company. From May to September 2019, Mr. Allison was a director of Rockpile Energy Services. From April 2015 to August 2016, Mr. Allison was a director of Silver Airways. From 2006 until his retirement in 2012, Mr. Allison served as Executive Vice President and Senior Managing Director of Mesirow Financial Consulting, LLC, a full-service financial and operational advisory consulting firm headquartered in Chicago. At Mesirow, Mr. Allison managed complex turnaround situations and advised on major reorganizations and insolvencies. He also served as CEO, CFO or CRO for several clients. From 2002 to 2006, Mr. Allison served as National Practice Leader of the restructuring practice of Huron Consulting Group. From 1988 to 2002, he served in a variety of roles at Arthur Andersen, LLC, including Partner-in-Charge, Central Region Restructuring Practice. Earlier in his career, Mr. Allison served in various capacities at Coopers & Lybrand, an accounting firm, First National Bank of Chicago and the Chicago Police Department. Mr. Allison has previously served as Chairman of the Association for Certified Turnaround Professionals, Chairman and Director of the Turnaround Management Association, is a Fellow in the American College of Bankruptcy and has taught as a guest lecturer at Northwestern University and DePaul University. Mr. Allison received his Bachelor of Science in commerce and his Master of Business Administration from DePaul University.

Roger Schoenfeld, 62
Director

Since 2005, Mr. Schoenfeld has served as a Managing Director at Cross Keys Capital, an investment banking firm, where he provides investment banking services to lower middle market companies, entrepreneurs and investors. Mr. Schoenfeld focuses primarily on representing owners of privately-held businesses in the sale and/or equity recapitalization of their businesses. From 1990 to 2005, Mr. Schoenfeld was a partner in various groups that acquired, operated and sold lower middle-market manufacturing businesses. From 1982 to 1988, he practiced law at Goldberg Kohn, a boutique Chicago law firm specializing in real estate, corporate and finance transactions. He actively serves on the Board of the Midwest Chapter of the Alliance of Merger and Acquisition Advisors (AMAA). Additionally, Mr. Schoenfeld has served on the Boards and Executive Committees of a number of Chicago area organizations, including Maot Chitim, Jewish National Fund, The Ark and The Board of Jewish Education of Metropolitan Chicago. He served as the President of the Chicago Chapter of the Precision Metal Forming Association and currently is a student mentor in College Bound Opportunities. He also passed the Certified Public Accounting exam. Mr. Schoenfeld obtained his J.D. from Georgetown University and graduated summa cum laude with a B.S. in Accounting from Indiana University.

John C. Chrystal, 62
Director

Mr. Chrystal has served as a director of INSU Acquisition Corp. II (Nasdaq: INAQ) since September 2020 and of INSU Acquisition Corp III (Nasdaq: IIII) since December 2020. Mr. Chrystal previously served as a director of Insurance Acquisition Corp., a former blank check company, from March 2018 to October 2020. He has served as a director of The Bancorp, Inc. (NYSE: TBBK) and the Bancorp Bank since 2013, and he previously served as Interim Chief Executive Officer of The Bancorp, Inc., and President of the Bancorp Bank, from January 2016 to June 2016. Mr. Chrystal has served as an independent director of MoneyLion, Inc. (a privately held financial wellness and consumer lending platform) since November 2016; an independent director of Regatta Loan Management LLC (a privately held, SEC-registered Investment Adviser) since 2015; and an independent director of the Trust for Advised Portfolios (a mutual fund series trust focused on multiple asset classes) since 2010. Mr. Chrystal was an independent director of Morgan Stanley Derivative Products, Inc. (an entity providing credit enhancement for select derivative transactions) from 2010 to 2017. Mr. Chrystal was an independent director of Javelin Mortgage Investments, Inc. (NYSE: JMI) (a mortgage real estate investment trust) from 2012 through its sale in 2016. From 2009 to 2012, Mr. Chrystal was a Managing Member of Bent Gate Advisors, LLC (a firm providing strategic advice to financial institutions); from 2005 through 2008 was the Chief Risk Officer of DiMaio Ahmad Capital (an investment management firm focused on corporate credit markets) and from 1993 to 2005 was a Managing Director with multiple Credit Suisse entities, with oversight of asset management and financial product functions.

 

ByMatt Cianci