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United States securities and exchange commission logo
April 24, 2021
Mark Gerhard
Chief Executive Officer
Ascendant Digital Acquisition Corp.
667 Madison Avenue, 5th Floor
New York, New York 10065
Re: Ascendant Digital
Acquisition Corp.
Registration
Statement on Form S-4
Filed March 25,
2021
File No. 333-254720
Dear Mr. Gerhard:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Form S-4 filed March 25, 2021
Cover Page
1. We note that Monument &
Cathedral is expected to beneficially own between
approximately 37% and
43% of BSG PubCo's common stock after the business
combination. Please
revise the cover page to disclose this beneficial ownership and note
the significant control
Monument & Cathedral will have over BSG PubCo. Additionally,
please add a risk
factor discussing material risks to you or your shareholders resulting
from Monument &
Cathedral's significant ownership interest.
Questions and Answers for Shareholders of ADAC, page vii
2. Please include a Q&A
explaining the purpose, benefits and detriments of your "Up-C"
structure to you, the
BSG Members and public shareholders. For example, describe the
Mark Gerhard
FirstName LastNameMark Gerhard
Ascendant Digital Acquisition Corp.
Comapany
April NameAscendant Digital Acquisition Corp.
24, 2021
April 224, 2021 Page 2
Page
FirstName LastName
economic and voting rights of BSG PubCo's dual class structure,
disclose the voting and
economic ownership interests of the various securityholder groups,
describe your role as
managing member of BSG LLC and note that this will give you control
over the affairs
and decision-making of BSG LLC.
Q. What will BSG stockholders receive in consideration of the transactions
contemplated by the
Business Combination Agreement?, page x
3. We note your statement that "[t]he Cash Consideration will be equal to
$374,000,000 and
no less than $0." To provide context for this wide range, provide
explanatory language
indicating that BSG stockholder redemptions will be the primary
determining factor in
how much cash will be received. Also, discuss the effects on the
company and its
stockholders if more cash than equity consideration is used to pay the
total consideration
amount. Lastly, while we note your disclosure on page 167 presenting
the breakdown of
equity and cash consideration assuming no redemptions or maximum
redemptions
scenarios, consider presenting additional scenarios along with their
calculations.
Q. What equity stake will current ADAC shareholders and BSG Stockholders...?,
page x
4. Please revise this table to separately disclose the percentage
ownership of Monument
& Cathedral.
Q. How has the announcement of the Business Combination affected the trading
price of the
ADAC Class A ordinary Shares?, page xi
5. Please revise to include the current trading prices of the securities
so that investors can
evaluate the impact the announcement of the Business Combination has
had on the trading
price of their securities.
Q. What are the U.S. federal income tax consequences of the Domestication?,
page xiv
6. Revise your response to begin with a definitive statement as to
whether investors are
likely to experience a taxable event as a result of the Domestication.
The remaining
narrative can serve to explain your conclusion.
Q. What happens to the funds deposited in the trust account after consummation
of the Business
Combination?, page xvii
7. It appears that your disclosure indicating $200,001,752 remains in the
trust account is a
typographical error. We note your disclosure on page 1 indicating that
as of December
31, 2020, $414,209,593 remained in the trust account.
Summary of the Proxy Statement/Prospectus, page 1
8. On page 14 you note that Monument & Cathedral controls both BSG LLC
and BSG
PubCo through its rights to nominate the majority of the members of
the board of
directors. Please revise, where appropriate, to briefly summarize
these nomination rights
Mark Gerhard
FirstName LastNameMark Gerhard
Ascendant Digital Acquisition Corp.
Comapany
April NameAscendant Digital Acquisition Corp.
24, 2021
April 324, 2021 Page 3
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FirstName LastName
and clarify whether these nomination rights are based on a contractual
agreement. If these
rights are based on a contractual agreement, please summarize this
agreement in the
related party section and file this agreement as an exhibit.
Quorum and Vote of ADAC Shareholders, page 8
9. You disclose here that the Sponsor has agreed to vote all of its
ordinary shares in favor of
the proposals being presented, including the business combination
proposal. Please
clarify whether other ADAC shareholders have entered into agreements
to vote in favor of
the proposals and, if so, disclose any such agreements. Additionally,
after factoring in the
shares subject to voting agreements, please disclose both the
percentage of remaining
shares needed to vote for the business combination proposal if: (i)
all of ADAC's
outstanding shares voted; and (ii) only a quorum of ADAC shares are
present.
The Tax Receivable Agreement will require BSG PubCo to make cash payments to
the BSG
Members..., page 44
10. Please revise to make clear that any substantial payments made to the
BSG Members
under the Tax Receivable Agreement will not be made to any of the ADAC
securityholders (who are not also current limited partners in the BSG
LLC).
Risk Factors
The provisions of the Proposed Charter requiring exclusive forum..., page 69
11. This risk factor states that the proposed charter will provide that
the U.S. federal district
courts shall be the exclusive forum for any complaint asserting a
cause of action arising
under the Securities Act. It also states that the Proposed Charter
will provide that the
exclusive forum provision will not apply to suits brought to enforce
any cause of action
arising under the Securities Act. Please revise to reconcile this
apparent discrepancy.
ADAC's Board of Directors' Reasons for the Approval of the Business Combination
Certain Projected Financial Information, page 115
12. You disclose certain projections that BSG LLC management provided to
the ADAC
board, including projected billings, adjusted EBITDA, revenue cash
flow conversion, paid
subscribers and ARPU. Please revise to also disclose the material
estimates and
assumptions underlying these projections.
U.S. Federal Income Tax Considerations, page 151
13. We note that you intend to structure the domestication as a
reorganization within the
meaning of Section 368 of the Tax Code. As a result, you intend for
the domestication to
be a non-taxable event for U.S. holders of ADAC securities, subject to
the other issues
(e.g., PFIC status) that could result in a taxable event for U.S.
holders of ADAC
securities. Revise to make clear that your conclusion as to tax
treatment under Section
368 of the Tax Code is based upon your opinion of tax counsel.
Mark Gerhard
FirstName LastNameMark Gerhard
Ascendant Digital Acquisition Corp.
Comapany
April NameAscendant Digital Acquisition Corp.
24, 2021
April 424, 2021 Page 4
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FirstName LastName
Unaudited Pro Forma Condensed Consolidated Financial Information
Description of the Business Combination, page 166
14. We note the second table on page 167 only reflects post transaction
shareholdings in BSG
PubCo giving effect to maximum and no redemption scenarios. Disclose
the ratio of the
change in the hypothetical numbers of shares to be issued to BSG
Members reflecting
partial redemptions of ADAC shares as might hypothetically occur.
15. We note that the Tax Receivable Agreement (TRA) will provide for the
payment by BSG
PubCo to BSG Members of 85% of the net cash savings that BSG PubCo
actually realizes
or is deemed to realize in certain circumstances in periods after the
planned
combination/recapitalization. Please disclose in detail your
anticipated accounting for the
TRA and advise us. Your response should address, but not necessarily
be limited to, the
following:
the initial accounting for any tax agreement liability recorded
in connection with the
reorganization transaction;
the accounting for any exchanges subsequent to the
reorganization transaction; and
the subsequent accounting for any changes to previously
recorded liabilities,
including i) adjustments to valuation allowances associated with
the underlying tax
assets and ii) other changes that impact the amount of net cash
savings realized by
BSG PubCo.
Reference the specific authoritative literature that supports your
accounting.
Unaudited Pro Forma Condensed Consolidated Balance Sheet, page 170
16. In light of the material transactions that will impact BSG LLC, please
present the BSG
balance sheet on a pro forma basis under the two scenarios prior to
giving effect to the
merger with ADAC so that the balance sheet of the entity for which the
ADAC
shareholders are considering investing in is transparent. In separate
pro forma adjustment
columns following the BSG LLC historical balance sheet, it appears at
a minimum you
should make adjustments to give effect to:
the cash consideration of $178 million paid to the Sellers and
related to the Class A
units of BSG LLC;
the distribution by BSG LLC to be made to the Sellers
immediately prior to the
recapitalization, in accordance with BSG LLC s existing
operating agreement, of all
cash and cash equivalents of Beacon Street Group as of such time;
the liability, and the related deferred tax asset, associated
with the Tax Receivable
Agreement and related to the expected payment by the Company to
the Sellers of
Mark Gerhard
FirstName LastNameMark Gerhard
Ascendant Digital Acquisition Corp.
Comapany
April NameAscendant Digital Acquisition Corp.
24, 2021
April 524, 2021 Page 5
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FirstName LastName
85% of the U.S. federal, state, and local income tax savings to
be realized by the
Company;
the shares of BSG PubCo Class B common stock to be issued to
the former Class A
unit holders of BSG LLC;
the purchase of certain Class B Units from the Sellers for cash
consideration of
$196.3 million or $13.1 million;
additional compensation expense of $935.0 million recorded in
accumulated deficit;
the issuance of shares of BSG PubCo Class B common stock to the
former holders of
Class B Units;
cash consideration of $11.8 million paid to the Sellers and
related to the Class A units
of BSG LLC;
the allocation of net assets to the non-controlling interests;
and
the allocation of accumulated losses of BSG LLC reclassified
into retained earnings.
The pro forma adjustment columns should be followed by a subtotal
columns to present
the BSG balance sheet information on a pro forma basis.
17. We note your pro forma consolidated condensed balance sheet reflects
material non-
controlling interest within stockholders' equity, primarily due to
retained interests by the
Sellers. We also note that holders of BSG PubCo Class B common stock
may in the
future redeem such common units for cash. Tell us your consideration
of whether
amounts involved should be classified outside of permanent equity in
accordance with
ASC 480-10-S99-3.
Unaudited Pro Forma Condensed Consolidated Financial Information
Adjustments to the Unaudited Pro Forma Condensed Consolidated Statement of
Operations,
page 173
18. Please disclose in sufficient detail, and provide us, your
calculations in support for pro
forma adjustment (ff) reflecting net loss attributable to
non-controlling interest. Tell us
the amounts estimated to be attributable to non-controlling interests
in post
recapitalization BSG LLC and to any other entities.
19. We note that pro forma adjustment (n)1 addresses the purchase of Class
B Units from
Sellers for cash in the amount of $196.3 subject to availability of
cash at closing. Please
disclose how this will be determined and present it as a separate pro
forma adjustment.
Similarly revise adjustment (t)1.
20. We note from pro forma adjustments (g), (k), (n)1, and (p), that the
Sellers will receive
Mark Gerhard
FirstName LastNameMark Gerhard
Ascendant Digital Acquisition Corp.
Comapany
April NameAscendant Digital Acquisition Corp.
24, 2021
April 624, 2021 Page 6
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FirstName LastName
approximately $500 million. It also appears the amounts estimated for
the TRA liability
and related tax assets are directly related to the number of ADAC
common stockholders
who chose to redeem their shares, as well as the amounts to be paid in
cash to Sellers for
Class B Units. Please disclose why and how the amounts estimated for
the TRA liability
and related tax assets appear to be dependent upon the amount of ADAC
cash paid to
certain shareholders of BSG LLC Class B unitholders and advise us.
Information About Beacon Street Group, page 191
21. On page 194, you disclose that Beacon Street Group's revenue for
fiscal 2018-2020.
Please revise to give equal or greater prominence to your net loss or
net income for each
of these periods.
Non-GAAP Financial Measures
Adjusted CFFO / Adjusted CFFO Margin, page 217
22. We note that current holders of Class B Units can expect to receive
future
distributions based upon their post-transaction converted BSG LLC
holdings under the
Tax Receivable Agreement. In light of this, tell us why you believe it
is appropriate to
add back profit distribution to Class B Unitholders accounted for as
stock-based
compensation that was paid in cash to Class B Unitholders in your
calculation of Adjusted
CFFO and Adjusted CFFO Margin.
Beacon Street Group's Management's Discussion and Analysis
Results of Operation, page 222
23. Please expand your discussion of results of operations to quantify and
to clarify the impact
on revenues and expense of recent business acquisitions and internal
growth on your
reported results. Discuss known trends related to acquisitions and
internal growth.
Liquidity and Capital Resources
General, page 226
24. We note that Beacon Street Group expects payment obligations under the
Tax Receivable
Agreement (TRA) to be significant. Please add disclosure addressing
how you intend to
fund required payments and the extent to which BSG PubCo will be
dependent on BSG
LLC in this regard. Address the extent to which you may rely on
proceeds obtained from
Ascendant Digital Acquisition Corp. to fund your TRA obligations.
Explain the potential
negative impact of these payouts; and, to the extent practical,
quantify the impact the TRA
will have on your liquidity, including reduction in your cash flows.
25. We further note from pages 44 and 45 that early termination of the Tax
Receivable
Agreement would result in acceleration of amounts due. Please expand
your discussion of
liquidity to address and, to the extent practical, quantify the impact
of such early
termination on your future liquidity and capital resources.
Mark Gerhard
FirstName LastNameMark Gerhard
Ascendant Digital Acquisition Corp.
Comapany
April NameAscendant Digital Acquisition Corp.
24, 2021
April 724, 2021 Page 7
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FirstName LastName
Beneficial Ownership of Securities, page 243
26. Please revise to include here or in a separate table the pre-business
combination beneficial
ownership of Beacon Street Group, LLC.
27. Please revise this section to include a discussion of the voting and
economic rights of BSG
PubCo's Class A and Class B common stock.
28. Please revise footnote 9 to the beneficial ownership table to disclose
the natural person(s)
with voting or dispositive power over the shares held by Monument &
Cathedral.
12. Stock-Based Compensation
Class B Units, page F-26
29. Please disclose in reasonable detail how your stock-based compensation
was determined
in each reporting period. Disclose the option pricing model employed
to determine the
fair value of the Class B units. Also disclose all material underlying
assumptions and
estimates.
Ascendant Digital Acquisition Corp.
Note 2. Summary of Significant Accounting Policies
Basis of presentation, page F-41
30. Where material, tell us what information and footnotes required by
GAAP are not
included and explain for us why omission of such disclosures is
appropriate.
Exhibits
31. Please file the form of proxy with your next amendment.
General
32. Please revise to add diagrams depicting the pre-combination
organizational structure
of both Ascendant Digital Acquisition Corp. and Beacon Street Group,
LLC and the post-
combination organizational structure of the combined company. Ensure
that these
diagrams clearly identify the economic and voting power percentages of
the different
securityholder groups, such as the Sponsor, the BSG Members and the
Ascendant Digital
Acquisition Corp. public stockholders.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Mark Gerhard
Ascendant Digital Acquisition Corp.
April 24, 2021
Page 8
You may contact Joseph Kempf, Senior Staff Accountant, at (202)
551-3352 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Mitchell Austin, Staff
Attorney, at (202) 551-3574 or Larry Spirgel, Office Chief, at (202) 551-3815
with any other
questions.
Sincerely,
FirstName LastNameMark Gerhard
Division of
Corporation Finance
Comapany NameAscendant Digital Acquisition Corp.
Office of Technology
April 24, 2021 Page 8
cc: Elliott Smith, Esq.
FirstName LastName