Table of Contents
Index to Financial Statements

As filed with the Securities and Exchange Commission on January 13, 2022

Registration No. 333-259570

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 4

to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

THAYER VENTURES ACQUISITION CORPORATION

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   6770   85-2426959
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

25852 McBean Parkway

Valencia, CA 91335

(415) 782-1414

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Mark E. Farrell

Co-Chief Executive Officer, Co-President and

Chief Financial Officer

Thayer Ventures Acquisition Corporation

25852 McBean Parkway

Valencia, CA 91335

(415) 782-1414

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

John T. McKenna

Daniel Peale

Milson C. Yu

Cooley LLP

3175 Hanover Street

Palo Alto, CA 94304

(650) 843-5000

 

James Hnat

General Counsel and Secretary

Inspirato LLC

1544 Wazee Street

Denver, CO 80202

(303) 586-7771

 

Tony Jeffries

Christina L. Poulsen

David G. Sharon

Wilson Sonsini Goodrich & Rosati, P.C.

650 Page Mill Road

Palo Alto, CA 94304

(650) 493-9300

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and after all conditions under the Business Combination Agreement to consummate the proposed merger are satisfied or waived.

If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  ☐

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities    

 

 

 


Table of Contents
Index to Financial Statements

The information in this preliminary proxy statement/prospectus is not complete and may be changed. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. These securities may not be issued until the registration statement filed with the Securities and Exchange Commission is effective.

 

PRELIMINARY PROXY STATEMENT AND PROSPECTUS

SUBJECT TO COMPLETION, DATED JANUARY 13, 2022

THAYER VENTURES

ACQUISITION CORPORATION

25852 McBean Parkway

Valencia, CA 91335

 

 

Dear Thayer Ventures Acquisition Corporation Stockholders:

Thayer Ventures Acquisition Corporation, a Delaware corporation (“Thayer”), Passport Merger Sub I Inc., a Delaware corporation and wholly-owned subsidiary of Thayer (“Blocker Merger Sub 1”), Passport Merger Sub II Inc., a Delaware corporation and wholly-owned subsidiary of Thayer (“Blocker Merger Sub 2”), Passport Merger Sub III Inc., a Delaware corporation and wholly-owned subsidiary of Thayer (“Blocker Merger Sub 3” and together with Blocker Merger Sub 1 and Blocker Merger Sub 2, the “Blocker Merger Subs”, and together with the Company Merger Sub, the “Merger Subs”), KPCB Investment I, Inc., a Delaware corporation (“KPCB Blocker”), Inspirato Group, Inc., a Delaware corporation (“IVP Blocker”), W Capital Partners III IBC, Inc., a Delaware corporation (“W Capital Blocker”, and together with KPCB Blocker and the IVP Blocker and any Non-Party Blocker (as defined in the accompanying proxy statement/prospectus), the “Blockers”), Passport Company Merger Sub, LLC, a Delaware limited liability company (“Company Merger Sub”), and Inspirato LLC, a Delaware limited liability company (“Inspirato”), entered into a business combination agreement (the “Business Combination Agreement”), pursuant to which (i) KPCB Blocker will merge with and into Blocker Merger Sub 1, with Blocker Merger Sub 1 as the surviving company and wholly-owned subsidiary of Thayer (the “KPCB Blocker Merger”), (ii) IVP Blocker will merge with an into Blocker Merger Sub 2, with Blocker Merger Sub 2 as the surviving company and wholly-owned subsidiary of Thayer (the “IVP Blocker Merger”), (iii) W Capital Blocker will merge with and into Blocker Merger Sub 3, with Blocker Merger Sub 3 as the surviving company and wholly-owned subsidiary of Thayer (the “W Capital Blocker Merger,” and together with the KPCB Blocker Merger and the IVP Blocker Merger and any mergers involving any Non-Party Blockers (if any), the “Blocker Mergers”) and (iv) immediately following the Blocker Mergers, Company Merger Sub will merge with and into Inspirato, with Inspirato as the surviving company, resulting in Inspirato becoming a subsidiary of Thayer (the “Company Merger,” together with the Blocker Mergers, the “Mergers” and together with the other transactions related thereto, the “Business Combination”).

At the closing of the Business Combination, (i) the equity interests of each Blocker will be cancelled and converted into the right to receive (A) shares of Combined Company Class A Common Stock (as defined in the accompanying proxy statement/prospectus) based on such Blocker’s pro rata ownership of Inspirato (adjusted upward for cash and cash equivalents of such Blocker and adjusted downward for debt and transaction expenses of such Blocker), plus (B) cash, if any, based on such Blocker’s pro rata ownership, plus (C) certain rights under the Tax Receivable Agreement; (ii) each outstanding unit of Inspirato (other than any units held by Thayer or any of its subsidiaries following the Blocker Mergers) will be cancelled and converted into the right to receive (1) New Common Units (as defined in the accompanying proxy statement/prospectus) of Inspirato, (2) cash, if any, (3) shares of Combined Company Class V Common Stock (as defined in the accompanying proxy statement/prospectus) and (4) certain rights under the Tax Receivable Agreement; and (iii) each option to purchase Inspirato units will be converted into an option to purchase Combined Company Class A Common Stock. For additional information, please see the section titled “The Business Combination Agreement — Consideration to be Received in the Business Combination — Holders of Inspirato Options” of this proxy statement/prospectus.

The aggregate consideration to be paid to Inspirato unitholders, including in respect of the Blocker Equity Interests, is based on an equity valuation of Inspirato equal to $1.07 billion, subject to (i) an upward adjustment for the aggregate amount of Transaction Expenses (as defined in the accompanying proxy statement/prospectus) incurred by Thayer in excess of $15 million; (ii) an upward adjustment for the greater of (1) $0 and (2) the amount, if any, by which (A) cash and cash equivalents of Inspirato (together with its subsidiaries), minus (B) the Distributed Cash Amount (as defined below), minus (C) indebtedness of Inspirato for borrowed money or evidenced by notes, bonds, debentures or similar contracts or instruments, exceeds $20 million; and (iii) an upward adjustment for the aggregate


Table of Contents
Index to Financial Statements

amount of exercise price that would be paid to Inspirato in respect of the exercise in full of all Inspirato Options immediately prior to the Business Combination. The “Distributed Cash Amount” is an amount in cash to be determined by Inspirato, provided that Inspirato may not distribute more than $5 million without Thayer’s consent if Inspirato’s cash and cash equivalents (after such distribution) would be less than $20 million.

On or prior to the consummation of the Business Combination, Sponsor will forfeit 1,500,000 shares of Thayer Class B Common Stock (as defined in the accompanying proxy statement/prospectus).

Following the completion of the Business Combination, as described below, the Combined Company’s organizational structure will be what is commonly referred to as an umbrella partnership corporation (or UP-C) structure, which is often used by entities classified as a partnership for U.S. federal income tax purposes, such as Inspirato, undertaking an initial public offering, an initial business combination with a SPAC or other going-public transactions. This organizational structure will allow certain Inspirato unitholders to retain their equity ownership in Inspirato.

In connection with the Business Combination, certain related agreements have been, or will be entered into on or prior to the Closing Date, including the A&R Inspirato LLCA, the Tax Receivable Agreement and the Registration Rights Agreement (each as defined in the accompanying proxy statement/prospectus). The A&R Inspirato LLCA will provide unitholders in Inspirato (other than PubCo and its subsidiaries) the right to exchange New Common Units, together with the cancellation of an equal number of shares of the Combined Company Class V Common Stock, for an equal number of shares of the Combined Company Class A Common Stock (or cash), subject to certain restrictions set forth therein. The redemptions or direct exchanges of New Common Units for cash or Class A Common Stock are collectively referred to as “exchange” throughout this proxy statement/ prospectus.

Thayer has executed subscription agreements with certain investors for the sale of an aggregate of 8,950,384 shares of Thayer Class A Common Stock in a private placement transaction at a purchase price of $10.00 per share for gross aggregate proceeds of approximately $89.5 million. The closing of the sale of these shares will occur concurrently with the consummation of the Business Combination. See the section titled “The Business Combination Agreement— Consideration to be Received in the Business Combination” of the attached proxy statement/prospectus for further information on the consideration being paid to the unitholders of Inspirato and the private placement transaction.

Thayer Units, Thayer Class A Common Stock and Thayer Warrants are currently listed on the Nasdaq Capital Market under the symbols “TVACU,” “TVAC,” and “TVACW,” respectively. Thayer has applied to list the shares of Combined Company Class A Common Stock and the warrants of the Combined Company on the Nasdaq Capital Market under the symbols “ISPO” and “ISPOW,” respectively, upon the closing of the Business Combination. At the closing of the Business Combination, each Thayer Unit will be separated into its components, which consists of one share of Thayer Class A Common Stock and one-half of one Thayer Warrant, and such units will no longer exist. Upon closing, Thayer intends to change its name from “Thayer Ventures Acquisition Corporation” to “Inspirato Incorporated.”

Thayer is holding a special meeting of its stockholders in order to obtain the stockholder approvals necessary to complete the Business Combination. At the Thayer special meeting of stockholders, which will be held on                     , 2022, at 10:00 a.m., Eastern time, via live webcast at the following address: https://www.cstproxy.com/tvac/2022, unless postponed or adjourned to a later date, Thayer will ask its stockholders to adopt the Business Combination Agreement, thereby approving the Business Combination, and approve the other proposals described in this proxy statement/prospectus. Additionally, you have the option to listen only to the Special Meeting by dialing 1 800-450-7155 (toll-free within the U.S. and Canada) or +1 857-999-9155 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 1862580#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.

After careful consideration, Thayer’s board of directors has unanimously approved the Business Combination Agreement and the other proposals described in this proxy statement/prospectus, and Thayer’s board of directors has determined that it is advisable to consummate the Business Combination. Thayer’s board of directors recommends that its stockholders vote “FOR” the proposals described in this proxy statement/prospectus.

 

 


Table of Contents
Index to Financial Statements

More information about Thayer, Inspirato and the Business Combination is contained in this proxy statement/ prospectus. Thayer and Inspirato urge you to read the accompanying proxy statement/prospectus, including the financial statements, annexes and other documents referred to herein, carefully and in their entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE 55 OF THIS PROXY STATEMENT/ PROSPECTUS.

On behalf of our board of directors, I thank you for your support and look forward to the successful completion of the Business Combination.

                    , 2022

 

Sincerely,

Mark E. Farrell

Co-Chief Executive Officer, Co-President and Chief Financial Officer

The accompanying proxy statement/prospectus is dated                     , 2022 and is first being mailed to the stockholders of Thayer on or about that date.

Your vote is very important. Whether or not you plan to attend the special meeting of Thayer stockholders online, please submit your proxy by completing, signing, dating, and mailing the enclosed proxy card in the pre-addressed postage paid envelope or by using the telephone or Internet procedures provided to you by your broker or bank. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting of Thayer stockholders and vote online, you must obtain a proxy from your broker or bank.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE BUSINESS COMBINATION DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE BUSINESS COMBINATION, OR PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION.


Table of Contents
Index to Financial Statements

THAYER VENTURES

ACQUISITION CORPORATION

25852 McBean Parkway

Valencia, CA 91335

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON                    , 2022

To the Stockholders of Thayer Ventures Acquisition Corporation:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the “special meeting”) of Thayer Ventures Acquisition Corporation, a Delaware corporation (“Thayer,” “we,” “our” or “us”), will be held on                     , 2022, at 10:00 a m., Eastern time, via live webcast at the following address: https://www.cstproxy.com/tvac/2022. Additionally, you have the option to listen only to the Special Meeting by dialing 1 800-450-7155 (toll-free within the U.S. and Canada) or +1 857-999-9155 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 1862580#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication. You are cordially invited to attend the special meeting for the following purposes:

 

   

Proposal No. 1 — The “Business Combination Proposal” — To consider and vote upon a proposal to approve and adopt the Business Combination Agreement, dated as of June 30, 2021, (as may be further amended from time to time, the “Business Combination Agreement”), by and among Thayer, the Blocker Merger Subs, the Company Merger Sub, the Blockers and Inspirato, pursuant to which the Blocker Mergers will be effected and, immediately following the Blocker Mergers, Company Merger Sub will merge with and into Inspirato, with Inspirato as the surviving company, resulting in Inspirato becoming a subsidiary of Thayer.

 

   

Proposal No. 2 — The “Charter Proposal” — To consider and vote upon a proposal to adopt the Proposed Certificate of Incorporation in the form attached hereto as Annex B.

 

   

Proposal No. 3 — The “Governance Proposals” — To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the Proposed Certificate of Incorporation and the Proposed Bylaws, presented separately in accordance with SEC requirements (collectively, the “Governance Proposals”):

 

   

Proposal No. 3A — Name Change Charter Amendment — To change Thayer’s name to “Inspirato Incorporated”;

 

   

Proposal No. 3B — Authorized Share Charter Amendment — To increase the number of authorized shares of our Class A Common Stock, to authorize a new class of common stock called the Class V Common Stock, and to increase the number of authorized shares of our “blank check” preferred stock;

 

   

Proposal No. 3C — Actions by Stockholders Charter Amendment — To require that stockholders only act at annual and special meeting of the corporation and not by written consent;

 

   

Proposal No. 3D — Corporate Opportunity Charter Amendment — To eliminate the current limitations in place on the corporate opportunity doctrine;

 

   

Proposal No. 3E — Voting Thresholds Charter Amendment — To increase the required vote thresholds for stockholders approving amendments to the Proposed Certificate of Incorporation and the Proposed Bylaws to 66 2/3%;

 

   

Proposal No. 3F — Classified Board Amendment – To provide that the PubCo Board be divided into three classes with only one class of directors being elected in each year and each class serving a three-year term; and

 

   

Proposal No. 3G — Additional Governance Amendments — To approve all other changes in connection with the replacement of the Existing Thayer Bylaws and Existing Thayer Certificate of


Table of Contents
Index to Financial Statements
 

Incorporation with the Proposed Certificate of Incorporation and the Proposed Bylaws, including adopting Delaware as the exclusive forum for certain shareholder litigation.

 

   

Proposal No. 4 — The “Incentive Plan Proposal” — To consider and vote upon a proposal to approve the Inspirato 2021 Equity Incentive Plan, including the authorization of the initial share reserve under such plan.

 

   

Proposal No. 5 — The “ESPP Proposal” — To consider and vote upon a proposal to approve the Inspirato 2021 Employee Stock Purchase Plan, including the authorization of the initial share reserve under such plan.

 

   

Proposal No.6 — The “Nasdaq Proposals” — To consider and vote upon the following proposals presented separately:

 

   

Proposal No. 6A — Merger Shares Issuance — To issue Combined Company Class A Common Stock and Combined Company Class V Common Stock in connection with the Mergers pursuant to the Business Combination Agreement; and

 

   

Proposal No. 6B — PIPE Shares Issuance — To issue Thayer Class A Common Stock to the investors in the PIPE (as defined herein).

 

   

Proposal No. 7 — The “Adjournment Proposal” — A proposal to adjourn the special meeting of Thayer’s stockholders to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote at such special meeting.

Only holders of record of Thayer Capital Stock (as defined herein) at the close of business on December 21, 2021 (the “Record Date”) are entitled to notice of and to vote at the special meeting and any adjournments or postponements of the special meeting.

In light of the ongoing health concerns relating to the COVID-19 pandemic and to best protect the health and welfare of Thayer’s stockholders and personnel, the special meeting will be held completely virtually, conducted only via webcast at the following address: https://www.cstproxy.com/tvac/2022. Additionally, you have the option to listen only to the Special Meeting by dialing 1 800-450-7155 (toll-free within the U.S. and Canada) or +1 857-999-9155 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 1862580#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication. There will be no physical meeting location.

Stockholders are nevertheless urged to submit their proxies by completing, signing, dating, and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope.

Pursuant to the Existing Thayer Certificate of Incorporation, Thayer is providing the holders of shares of Thayer Class A Common Stock originally sold as part of the Thayer Units issued in our initial public offering (the “IPO,” such shares, the “Public Shares,” and such holders, the “Public Stockholders”) with the opportunity to redeem, upon the Closing, the Public Shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit as of two business days prior to the Closing, in the trust account (the “Trust Account”) that holds the proceeds (including interest not previously released to Thayer to pay its income taxes or any other taxes payable) from the IPO. For illustrative purposes, based on the fair value of cash and marketable securities held in the Trust Account as of September 30, 2021 of approximately $176 million, the estimated per share redemption price would have been approximately $10.20. Public Stockholders may elect to redeem their shares whether or not they are holders as of the Record Date and whether or not they vote for the Business Combination Proposal. Holders of Thayer’s outstanding warrants sold in the IPO, which are exercisable for shares of Thayer Class A Common Stock under certain circumstances, do not have redemption rights in connection with the Business Combination. Thayer Ventures Sponsor LLC, as the initial stockholder of Thayer (the “Sponsor”), has agreed to waive its redemption rights in connection with the Closing with respect to its shares, and the Sponsor’s shares will be excluded from the pro rata calculation used to determine the per share redemption price. As of the Record Date, the Sponsor owned approximately 19.4% of outstanding Thayer Capital Stock.


Table of Contents
Index to Financial Statements

Thayer may not consummate the Business Combination unless the Business Combination Proposal, the Charter Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals (collectively, the “Required Proposals”) are approved at the special meeting, each of which is conditioned upon all such proposals having been approved at the special meeting. The approval of the Charter Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the outstanding shares of Thayer Class A Common Stock as of the Record Date and the affirmative vote of the holders of a majority of the outstanding shares of Thayer Class B Common Stock as of the Record Date, each voting as a separate class. We determined to provide for a separate vote of the Charter Proposal by the holders of Thayer Class A Common Stock following consideration of stockholder feedback regarding the Charter Proposal. The approval of each of the Business Combination Proposal, the Governance Proposals, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the shares of Thayer Capital Stock that are voted at the special meeting. The Sponsor and the directors of Thayer, collectively, own all of the outstanding shares of Thayer Class B Common Stock and each has agreed to vote all shares of Thayer Capital Stock owned by the Sponsor or such director, as applicable, including shares of Thayer Class B Common Stock, in favor of the Business Combination Proposal, the Charter Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals. The Adjournment Proposal is not conditioned on the approval of any other Stockholder Proposal (as defined herein) set forth in the accompanying proxy statement/prospectus. The Business Combination is not conditioned on the separate approval of the Governance Proposals (separate and apart from approval of the Charter Proposal)

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the financial statements and annexes attached thereto) for a more complete description of the proposed Business Combination and related transactions and each of our proposals. We encourage you to read this proxy statement/ prospectus carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali, at (800) 662-5200 (Individuals) or (203) 658-9400 (banks and brokers) or email: TVAC.info@investor.morrowsodali.com.

 

By Order of the Board of Directors,

Mark E. Farrell

Co-Chief Executive Officer, Co-President and Chief Financial Officer

                    , 2022


Table of Contents
Index to Financial Statements

TABLE OF CONTENTS

 

     Page  

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON                      , 2022

  

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     1  

CERTAIN DEFINED TERMS

     2  

MARKET AND INDUSTRY DATA

     10  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

     11  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     29  

SELECTED CONSOLIDATED HISTORICAL FINANCIAL INFORMATION OF INSPIRATO

     49  

SELECTED HISTORICAL FINANCIAL INFORMATION OF THAYER

     51  

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     52  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     53  

RISK FACTORS

     55  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     105  

MARKET PRICE AND DIVIDEND INFORMATION

     119  

COMPARATIVE SHARE INFORMATION

     120  

THE SPECIAL MEETING OF THAYER STOCKHOLDERS

     122  

PROPOSALS TO BE CONSIDERED BY THAYER’S STOCKHOLDERS

     129  

PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL THE BUSINESS COMBINATION

     129  

PROPOSAL NO. 2 — THE CHARTER PROPOSAL

     179  

PROPOSAL NO. 3 — THE GOVERNANCE PROPOSALS

     185  

PROPOSAL NO. 4 — THE INCENTIVE PLAN PROPOSAL

     189  

PROPOSAL NO. 5 — THE ESPP PROPOSAL

     198  

PROPOSAL NO. 6 — THE NASDAQ PROPOSALS

     204  

PROPOSAL NO. 7 — THE ADJOURNMENT PROPOSAL

     206  

INFORMATION ABOUT INSPIRATO

     207  

INSPIRATO’S EXECUTIVE COMPENSATION

     230  

CERTAIN INSPIRATO RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     241  

INSPIRATO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     246  

INFORMATION ABOUT THAYER

     264  

THAYER MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     272  

CERTAIN THAYER RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     278  

MANAGEMENT AFTER THE BUSINESS COMBINATION

     281  

DESCRIPTION OF THAYER’S SECURITIES

     289  

SHARES ELIGIBLE FOR FUTURE SALE

     302  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     307  

 

i


Table of Contents
Index to Financial Statements

TABLE OF CONTENTS

(continued)

 

     Page  

ADDITIONAL INFORMATION

     312  

WHERE YOU CAN FIND MORE INFORMATION

     313  

TRADEMARK NOTICE

     313  

INDEX TO FINANCIAL STATEMENTS

     F-1  

Annex A-1 — Business Combination Agreement

     A-1  

Annex A-2 — Amendment to Business Combination Agreement

     A-2  

Annex B — Amended and Restated Certificate of Incorporation of the Combined Company

     B-1  

Annex C — Amended and Restated Bylaws of the Combined Company

     C-1  

Annex D — Amended and Restated Limited Liability Company Agreement of Inspirato

     D-1  

Annex E — Form of Amended and Restated Registration Rights Agreement

     E-1  

Annex F — Form of Transaction Support Agreement

     F-1  

Annex G — Form of Sponsor Side Letter

     G-1  

Annex H — Form of Tax Receivable Agreement

     H-1  

Annex I — Form of Subscription Agreement

     I-1  

Annex J — Form of Inspirato 2021 Equity Incentive Plan

     J-1  

Annex K — Form of Inspirato 2021 Employee Stock Purchase Plan

     K-1  

 

ii


Table of Contents
Index to Financial Statements

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC, by Thayer (File No. 333-259570) (the “Registration Statement”), constitutes a prospectus of Thayer under Section 5 of the Securities Act, with respect to the shares of Combined Company Class A Common Stock and Combined Company Class V Common Stock to be issued if the Business Combination described herein is consummated. This document also constitutes a notice of meeting and a proxy statement/ prospectus under Section 14(a) of the Exchange Act with respect to the special meeting of Thayer stockholders at which Thayer stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.

 

1


Table of Contents
Index to Financial Statements

CERTAIN DEFINED TERMS

In this document:

A&R Inspirato LLCA” means the Ninth Amended and Restated Limited Liability Company Agreement of Inspirato, to be approved and entered into in connection with the Business Combination.

Adjournment Proposal” means a proposal to adjourn the special meeting of the stockholders of Thayer to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote at such special meeting.

Aggregate Consideration” means the aggregate Per Share Blocker Merger Consideration and the aggregate Per Unit Merger Consideration.

Assumed Inspirato Options” means options to purchase shares of Combined Company Class A Common Stock following the Mergers (for the avoidance of doubt, not inclusive of any options that may be granted under the Inspirato 2021 Equity Incentive Plan).

“Blocker Effective Time” means the time of filing of the certificates of merger with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of the DGCL and mutually agreed by the parties, for the Blocker Mergers, or such later time as may be agreed by the parties and specified in such certificate of merger for consummation of the Blocker Mergers.

“Blocker Equity Interests” means the issued and outstanding shares of capital stock or other equity interests in a Blocker immediately prior to the Blocker Effective Time.

Blocker Merger Sub 1” means Passport Merger Sub I Inc., a Delaware corporation and wholly-owned subsidiary of Thayer.

Blocker Merger Sub 2” means Passport Merger Sub II Inc., a Delaware corporation and wholly-owned subsidiary of Thayer.

Blocker Merger Sub 3” means Passport Merger Sub III Inc., a Delaware corporation and wholly-owned subsidiary of Thayer.

Blocker Mergers” means (i) the merger of KPCB Blocker with Blocker Merger Sub 1, with Blocker Merger Sub 1 as the surviving company and wholly-owned subsidiary of Thayer, (iii) the merger of IVP Blocker with Blocker Merger Sub 2, with Blocker Merger Sub 2 as the surviving company and wholly-owned subsidiary of Thayer, (iii) the merger of W Capital Blocker with Blocker Merger Sub 3, with Blocker Merger Sub 3 as the surviving company and wholly-owned subsidiary of Thayer, and (iv) any Non-Party Blocker Mergers (if any).

Blockers” mean, collectively, W Capital Broker, IVP Blocker, KPCB Blocker and any Non-Party Blocker.

Blocker Sellers” mean, collectively, the shareholders of the Blockers.

Broker non-vote” means the failure of a Thayer stockholder, who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.

Business Combination” means the transactions contemplated by the Business Combination Agreement.

Business Combination Agreement” means the Business Combination Agreement, dated as of June 30, 2021 and as may be further amended from time to time, by and among Thayer, Inspirato, the Merger Subs and the Blockers.

 

2


Table of Contents
Index to Financial Statements

Business Combination Proposal” means the proposal to approve the adoption of the Business Combination Agreement and the Business Combination.

Charter Proposal” means the proposal to consider and vote upon certain amendments to the Existing Thayer Certificate of Incorporation in connection with the Business Combination.

Closing” means the consummation of the Business Combination.

Closing Date” means the date on which the Closing occurs.

Closing Price” means, for each Trading Day, the closing price (based on such Trading Day) of shares of Thayer Class A Common Stock on the Trading Market, as reported on Nasdaq.com.

Code” means the Internal Revenue Code of 1986, as amended.

Combined Company” means Inspirato Incorporated and its consolidated subsidiaries, immediately upon consummation of the Business Combination.

Combined Company Class A Common Stock” means the Combined Company’s Class A Common Stock, par value $0.0001 per share, authorized under the Proposed Certificate of Incorporation.

Combined Company Class V Common Stock” means the Combined Company’s Class V Common Stock, par value $0.0001 per share, authorized under the Proposed Certificate of Incorporation.

Combined Company Common Stock” means the Combined Company’s Class A Common Stock and Class V Common stock.

Combined Company Preferred Stock” means the Combined Company’s preferred stock, par value $0.0001 per share, authorized under the Proposed Certificate of Incorporation.

Combined Company Stockholders” means the holders of Combined Company Class A Common Stock, Combined Company Class V Common Stock and Combined Company Preferred Stock, following the consummation of the Business Combination.

Company Merger Sub” means Passport Company Merger Sub, LLC, a Delaware limited liability company.

Company Merger” means the merger of Company Merger Sub into Inspirato, with Inspirato as the surviving company, resulting in Inspirato becoming a subsidiary of Thayer, which merger will occur immediately following the Blocker Mergers.

DGCL” means the Delaware General Corporation Law.

Distributed Cash Amount” means an amount, determined by Inspirato prior to the Closing; provided that the “Distributed Cash Amount” shall not be an amount greater than $5 million if the sum of (i) Inspirato’s cash and cash equivalents, minus (ii) the Distributed Cash Amount is less than $20 million, without the prior written consent of Thayer.

Effective Time” means the time of filing of a certificate of merger with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of the DGCL and mutually agreed by the parties, for the Company Merger, or such later time as may be agreed by the parties and specified in such certificate of merger for consummation of the Company Merger.

Equity Merger Consideration” means (a) $1.07 billion, plus (b) the aggregate amount of Thayer Transaction Expenses in excess of $15 million, plus (c) the greater of (i) $0 and (ii) the amount, if any, by which

 

3


Table of Contents
Index to Financial Statements

(A) cash and cash equivalents of Inspirato, minus (B) the Distributed Cash Amount, minus (C) indebtedness for borrowed money or indebtedness evidenced by notes, bonds, debentures or similar contracts or instruments of Inspirato, exceeds $20 million, plus (d) the aggregate amount of exercise price that would be paid to Inspirato in respect of the exercise in full of all Inspirato Options.

ESPP Proposal” means the proposal to approve the adoption of the ESPP.

Evercore” means Evercore Group L.L.C., financial advisor to Thayer and a placement agent for institutional investors to Thayer for the PIPE.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

Exchange Ratio” means the following ratio (rounded to four decimal places) to be used with respect to Assumed Inspirato Options: the quotient obtained by dividing (i) the Equity Merger Consideration plus the Distributed Cash Amount by (ii) $10.00 by (iii) the Fully Diluted Number.

Existing Thayer Bylaws” means Thayer’s amended and restated bylaws as currently in effect.

Existing Thayer Certificate of Incorporation” means Thayer’s amended and restated certificate of incorporation as currently in effect.

Founder Shares” means the shares of Thayer Class B Common Stock purchased by the Sponsor in a private placement prior to the IPO, of which 4,312,500 were outstanding as of the Record Date, and the Thayer Class A Common Stock that will be issued upon the conversion thereof in connection with the Business Combination.

Fully Diluted Number” means the total number of Inspirato Units outstanding as of immediately prior to the Blocker Effective Time, and after giving effect to the A&R Inspirato LLCA, determined on a fully-diluted, as-if exercised basis and assuming the exercise (as applicable) and settlement of all Inspirato Options, whether or not exercised, exercisable, settled, eligible for settlement or vested and after giving effect to the repurchase by Inspirato of certain Inspirato Units.

Governance Proposals” means the non-binding, advisory proposals to adopt certain governance provisions in the Proposed Certificate of Incorporation and the Proposed Bylaws.

Inspirato” means (i) prior to the Company Merger, Inspirato LLC, a Delaware limited liability company, and its consolidated subsidiaries, and (ii) following the Company Merger, Inspirato LLC, a Delaware limited liability company, and its consolidated subsidiaries, a subsidiary of the PubCo.

Inspirato Common Units” means the Common Units, as such term is defined in the Inspirato LLCA.

Inspirato Convertible Preferred Units” means, collectively, the Series A-1 Convertible Preferred Units, Series A-2 Convertible Preferred Units, Series B Convertible Preferred Units, Series B-1 Convertible Preferred Units, Series C Convertible Preferred Units, Series D Convertible Preferred Units and Series E Preferred Units, as such terms are defined in the Inspirato LLCA.

Inspirato LLCA” means the Amended and Restated Limited Liability Company Agreement of Inspirato, dated as of February 9, 2020.

Inspirato Options” means options to purchase Inspirato Units outstanding immediately prior to the consummation of the Mergers.

 

4


Table of Contents
Index to Financial Statements

Inspirato Requisite Approval” means the affirmative vote of (a) the holders of a majority of (i) the outstanding Inspirato Units, voting together as a single class, on an as converted to Inspirato Common Units basis, (ii) the outstanding Inspirato Convertible Preferred Units, voting as a single class, on an as converted to Inspirato Common Units basis, and (iii) the outstanding Inspirato Common Units, voting as a separate class, and (b) each of KCPB Investment I, Inc., Inspirato Group, Inc., W Capital Partners III, IBC, Inc. and Revolution Portico Holdings LLC.

Inspirato Units” means, collectively, the Inspirato Common Units and the Inspirato Convertible Preferred Units.

Investment Company Act” means the Investment Company Act of 1940, as amended.

IPO” means Thayer’s initial public offering of units, consummated on December 15, 2020.

“IVP Blocker” means Inspirato Group, Inc., a Delaware corporation.

JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended.

KPCB Blocker” means KPCB Investment I, Inc., a Delaware corporation.

Member” means a limited liability company member of Inspirato.

Mergers” means, collectively, the Blocker Mergers and the Company Merger.

Nasdaq Proposals” means the separate proposals to consider and vote to (a) issue Combined Company Class A Common Stock and Combined Company Class V Common Stock in connection with the Mergers pursuant to the Business Combination Agreement and (b) issue Thayer Class A Common Stock to the PIPE Subscribers.

Nasdaq” means the Nasdaq Capital Market.

New Common Units” means common units representing limited liability company interests of Inspirato following the Business Combination, which will be non-voting economic interests in Inspirato.

Non-Party Blocker” means any holder of Inspirato Units that is a corporate entity that was not a party to the Business Combination Agreement as of June 30, 2021 and, with Inspirato’s consent, executes and delivers a joinder to the Business Combination Agreement prior to the Closing in accordance with the terms thereof.

Non-Party Blocker Merger” means the merger of any Non-Party Blocker with and into a newly formed merger sub of Thayer at the effective time of the Blocker Mergers.

PCAOB” means the U.S. Public Company Accounting Oversight Board.

Per Share Blocker Merger Consideration” means the number of shares of Combined Company Class A Common Stock equal to the quotient of (a)(i) the Total Per Blocker Equity Consideration with respect to such Blocker, divided by (ii) with respect to each Blocker, the number of outstanding Blocker Equity Interests of such Blocker as of immediately prior to the Blocker Effective Time, plus (b) an amount in cash equal to the quotient of (i) the Total Per Blocker Cash Consideration with respect to such Blocker, divided by (ii) with respect to each Blocker, the number of outstanding Blocker Equity Interests of such Blocker as of immediately prior to the Blocker Effective Time, plus (c) certain rights under the Tax Receivable Agreement.

Per Unit Unitholder Merger Consideration” means (a) the number of New Common Units equal to the quotient of (i)(A) the Equity Merger Consideration, divided by (B) $10.00, divided by (ii) the Fully Diluted

 

5


Table of Contents
Index to Financial Statements

Number, plus (b) an amount in cash equal to (i) the Distributed Cash Amount, divided by (ii) the number of Inspirato Units outstanding as of immediately prior to the Blocker Effective Time, and after giving effect to the A&R Inspirato LLCA, plus (c) a number of shares of Combined Company Class V Common Stock equal to the quotient of (i)(A) the Equity Merger Consideration, divided by (B) $10.00, divided by (ii) the Fully Diluted Number, plus (d) certain rights under the Tax Receivable Agreement.

PIPE” means that certain private placement in the aggregate amount of approximately $89.5 million, to be consummated substantially concurrently with the consummation of the Business Combination, pursuant to those certain Subscription Agreements with Thayer, under which, subject to the conditions set forth therein, the PIPE Subscribers will purchase 8,950,384 shares of Thayer Class A Common Stock at a purchase price of $10.00 per share.

PIPE Commitment” means an aggregate of approximately $89.5 million committed pursuant to the Subscription Agreements.

PIPE Shares” means an aggregate of 8,950,384 shares of Thayer Class A Common Stock to be issued to PIPE Subscribers in the PIPE.

PIPE Subscribers” means the purchasers of the PIPE Shares pursuant to the Subscription Agreements.

Private Warrants” means the warrants to purchase shares of Thayer Class A Common Stock purchased in a private placement in connection with the IPO.

Proposed Bylaws” means the proposed bylaws of the PubCo that will be effective upon the Closing and are attached to this proxy statement/prospectus as Annex C.

Proposed Certificate of Incorporation” means the proposed certificate of incorporation of the PubCo that will be effective upon the Closing and is attached to this proxy statement/prospectus as Annex B.

PubCo” means Inspirato Incorporated, a Delaware corporation, upon and after the consummation of the Business Combination, and excluding any subsidiaries or affiliates.

Public Shares” means shares of Thayer Class A Common Stock issued as a component of the Thayer Units sold in the IPO (whether such shares were purchased in the IPO or in the secondary market following the IPO).

Public Stockholders” means the holders of the Public Shares.

Public Warrants” means the warrants included as a component of the Thayer Units sold in the IPO, each of which is exercisable for one share of Thayer Class A Common Stock, in accordance with its terms.

Registration Rights Agreement” means that certain amended and restated registration and stockholder rights agreement, to be dated the Closing Date, between the Sponsor, certain holders of Thayer Class A Common Stock and certain unitholders of Inspirato.

SEC” means the U.S. Securities and Exchange Commission.

Securities Act” means the U.S. Securities Act of 1933, as amended.

Sponsor” means Thayer Ventures Acquisition Holdings LLC, a Delaware limited liability company.

Stifel” means Stifel Nicolaus & Company, Incorporated, capital markets advisor to Thayer and a placement agent for institutional investors to Thayer for the PIPE.

 

6


Table of Contents
Index to Financial Statements

Stockholder Proposals” means, individually or collectively as the context requires, the Business Combination Proposal, the Charter Proposal, the Governance Proposals, the Incentive Plan Proposal, the ESPP Proposal, the Nasdaq Proposals and/or the Adjournment Proposal.

Subscription Agreement” means each agreement, as amended, pursuant to which the PIPE Subscribers agreed to purchase, and Thayer agreed to issue and sell 8,950,384 PIPE Shares at a purchase price of $10.00 per share in the PIPE.

Tax Receivable Agreement” means that certain tax receivable agreement, to be dated the Closing Date, between certain holders of Inspirato Units, owners of equity interests of the Blockers, and the PubCo, pursuant to which, among other things, the PubCo will pay to the other parties thereto 85% of certain tax benefits, if any, that the PubCo realizes.

Thayer” means Thayer Ventures Acquisition Corporation, a Delaware corporation.

Thayer Capital Stock” means, collectively, Thayer Class A Common Stock, Thayer Class B Common Stock and Thayer Preferred Stock.

Thayer Class A Common Stock” means Thayer’s Class A Common Stock, par value $0.0001 per share, prior to the filing of the Proposed Certificate of Incorporation.

Thayer Class B Common Stock” means Thayer’s Class B common stock, par value $0.0001 per share, prior to the filing of the Proposed Certificate of Incorporation.

Thayer Preferred Stock” means Thayer’s preferred stock, par value $0.0001 per share, prior to the filing of the Proposed Certificate of Incorporation.

Thayer Unit” means one share of Thayer Class A Common Stock and one half of a Thayer Warrant.

Thayer Warrant Agreement” means that certain warrant agreement, dated December 10, 2020, by and between Thayer and Continental Stock Transfer & Trust Company.

Thayer Warrants” means whole warrants to purchase shares of Thayer Class A Common Stock as contemplated under the Thayer Warrant Agreement, with each whole warrant exercisable for one share of Thayer Class A Common Stock at an exercise price of $11.50, and refer to whole warrants to purchase shares of Combined Company Class A Common Stock following the consummation of the Business Combination.

Total Per Blocker Cash Consideration” means, with respect to each Blocker (a) an amount in cash equal to the quotient of (i) the Distributed Cash Amount divided by (ii) the Fully Diluted Number, multiplied by (b) the number of Inspirato Units held by such Blocker as of immediately prior to the Blocker Effective Time, and after giving effect to the A&R Inspirato LLCA.

Total Per Blocker Equity Consideration” means, with respect to each Blocker (a) a number of shares of Combined Company Class A Common Stock equal to (i) the quotient of (A)(1) the sum of (w) the Equity Merger Consideration, plus (x) with respect to each Blocker, such Blocker’s cash and cash equivalents (if any), minus (y) with respect to each Blocker, such Blocker’s indebtedness (as determined in accordance with the Business Combination Agreement), minus, (z) with respect to each Blocker, such Blocker’s unpaid Transaction Expenses, divided by (2) $10.00, divided by (B) the Fully Diluted Number, multiplied by (ii) the number of Inspirato Units held by such Blocker as of immediately prior to the Blocker Effective Time, and after giving effect to the A&R Inspirato LLCA.

Trading Day” means any day on which shares of Thayer Class A Common Stock are actually traded on the Trading Market.

 

7


Table of Contents
Index to Financial Statements

Trading Market” means the stock market on which shares of Thayer Class A Common Stock shall be trading at the time of determination of the Closing Price.

Transaction Expenses” means, with respect to Thayer, Merger Subs, Blockers or Inspirato (including its subsidiaries), to the extent not paid as of the Closing by such party:

 

   

all fees, costs and expenses (including fees, costs and expenses of third-party advisors, legal counsel, accountants, investment bankers, or other advisors, service providers, representatives) including brokerage fees and commissions, incurred or payable by Thayer, Merger Subs or the Sponsor through the Closing in connection with the preparation of the financial statements in connection with the filings required in connection with the transactions contemplated by the Business Combination Agreement, the negotiation and preparation of the Business Combination Agreement, the other agreements entered into in connection with the Business Combination Agreement and this proxy statement/prospectus and the consummation of the transactions contemplated by the Business Combination Agreement (including due diligence) or in connection with Thayer’s pursuit of a Business Combination, and the performance and compliance with all agreements and conditions contained herein or therein to be performed or complied with;

 

   

all fees, costs and expenses (including fees, costs and expenses of third-party advisors, legal counsel, investment bankers, or other representatives), incurred or payable by Thayer, Merger Subs, Inspirato (including its subsidiaries), or the Blockers through the Closing in connection with the preparation of the financial statements of Inspirato, the negotiation and preparation of the Business Combination Agreement, the other agreements entered into in connection with the Business Combination Agreement and this proxy statement/prospectus and the consummation of the transactions contemplated by the Business Combination Agreement;

 

   

any fees, costs and expenses incurred or payable by the Thayer, Merger Subs, the Sponsor, the Blockers or Inspirato (including its subsidiaries) through the Closing in connection with the PIPE;

 

   

any amounts incurred under or in connection with any retention, severance, transaction, change in control and similar bonuses or arrangements that are owed by Inspirato (including its subsidiaries), Thayer, Merger Subs or any Blocker to any current or former employee or other individual service provider and that will be triggered, solely as a result of the transactions contemplated by this Agreement plus the employer portion of any payroll or other employment taxes related thereto (including, to the extent not included in the computation of indebtedness of Blockers (as determined in accordance with the Business Combination Agreement), all “applicable employment taxes” (as defined in Section 2302(d)(1) of the CARES Act) that any Blocker or Inspirato (including its subsidiaries) has elected to defer pursuant to Section 2302 of the CARES Act, and all payroll or other employment Taxes deferred pursuant to Internal Revenue Service Notice 2020-65 or any related or similar order or declaration from any governmental entity (including without limitation the Presidential Memorandum, dated August 8, 2020, issued by the President of the United States));

 

   

all fees, costs and expenses paid or payable by Inspirato to obtain directors and officers “tail” insurance policy;

 

   

all filing fees paid or payable to a governmental entity in connection with any filing required to be made under the HSR Act;

 

   

all fees, costs and expenses paid or payable to Continental Stock Transfer & Trust Company, as transfer agent;

 

   

any amounts unpaid under the terms of any affiliated transactions, or related to the termination of any affiliated transactions; and

 

   

all transfer taxes required to be paid by Thayer or Inspirato (including its subsidiaries).

Trust Account” means the trust account that holds the net proceeds of the IPO and a portion of the proceeds from the concurrent sale of the Private Warrants.

 

8


Table of Contents
Index to Financial Statements

UBS” means UBS Securities LLC, financial advisor and capital markets advisor to Inspirato, and a placement agent for institutional investors to Thayer for the PIPE.

W Capital Blocker” means W Capital Partners III IBC, Inc., a Delaware corporation.

Written Consent” means the irrevocable written consent of holders of the Inspirato Requisite Approval in favor of (i) the approval and adoption of the Business Combination Agreement and the Business Combination, (ii) an agreement to enter into, as applicable, any agreements or documentation reasonably required connection with the obligations of Inspirato to terminate certain contracts of Inspirato and (iii) the adoption and approval of the A&R Inspirato LLCA.

Share Calculations and Ownership Percentages

Unless otherwise specified (including in the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Security Ownership of Certain Beneficial Owners and Management”), the share calculations and ownership percentages set forth in this proxy statement/prospectus with respect to the holders of capital stock of the Combined Company following the Business Combination are for illustrative purposes only and assume the following:

 

  1.

No Public Stockholders exercise their redemption rights in connection with the Closing, and the balance of the Trust Account as of the Closing is the same as its balance on September 30, 2021 of approximately $176 million.

 

  2.

An aggregate of 27,469,847 shares of Combined Company Class A Common Stock are issued to the Blocker Sellers at the Closing.

 

  3.

An aggregate of 7,491,849 shares of Combined Company Class A Common Stock are reserved for future issuance under the Assumed Inspirato Options at the Closing, which assumes no exercises, forfeitures, or cancellations of options outstanding subsequent to December 28, 2021.

 

  4.

An aggregate of 72,962,085 New Common Units and an equal number of shares of Combined Company Class V Common Stock are issued to Flow Through Sellers at the Closing. See the section entitled “Certain Agreements Related to the Business Combination A&R Inspirato LLCA.”

 

  5.

1,500,000 shares of Thayer Class B Common Stock are forfeited by Sponsor, and 2,812,500 shares of Thayer Class B Common Stock are converted at Closing into an equal number of shares of Combined Company Class A Common Stock. Please see the section entitled “Certain Agreements Related to the Business Combination Sponsor Side Letter.

 

  6.

The PIPE Subscribers acquire at the Closing, in accordance with the Subscription Agreements, 8,950,384 million shares of Thayer Class A Common Stock, for an aggregate purchase price of approximately $89.5 million.

 

  7.

For purposes of the number of shares of Thayer Class A Common Stock redeemable, the per share redemption price is $10.20; the actual per share redemption price will be equal to the pro rata portion of the Trust Account calculated as of two business days prior to the Closing.

 

9


Table of Contents
Index to Financial Statements

MARKET INDUSTRY AND DATA

Information contained in this proxy statement/prospectus concerning the market and the industry in which Inspirato competes, including its market position, general expectations of market opportunity and market size, is based on information from various third-party sources, on assumptions made by Inspirato based on such sources and Inspirato’s knowledge of the markets for its services and solutions. Any estimates provided herein involve numerous assumptions and limitations, and you are cautioned not to give undue weight to such information. Third-party sources generally state that the information contained in such source has been obtained from sources believed to be reliable; however, neither Inspirato nor Thayer has verified the accuracy or completeness of third-party data. The industry in which Inspirato operates is subject to a high degree of uncertainty and risk. As a result, the estimates and market and industry information provided in this proxy statement/prospectus are subject to change based on various factors, including those described in the section entitled “Risk Factors — Risks Related to Inspirato’s Business and Industry and Risks Related to an Investment in Securities of the Combined Company” and elsewhere in this proxy statement/prospectus.

 

10


Table of Contents
Index to Financial Statements

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting of stockholders, including with respect to the proposed Business Combination. The following questions and answers may not include all the information that is important to Thayer’s stockholders. Stockholders are urged to read carefully this proxy statement/prospectus in its entirety, including the financial statements and annexes attached hereto and the other documents referred to herein.

Q.    Why am I receiving this proxy statement/prospectus?

 

A.

Thayer has entered into the Business Combination Agreement, dated as of June 30, 2021, (as may be further amended from time to time, the “Business Combination Agreement”), by and among Thayer, the Blocker Merger Subs, the Company Merger Sub, the Blockers and Inspirato, pursuant to which the Blocker Mergers will be effected and, immediately following the Blocker Mergers, Company Merger Sub will merge with and into Inspirato, with Inspirato as the surviving company, resulting in Inspirato becoming a subsidiary of PubCo. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A, and Thayer encourages its stockholders to read it in its entirety. Thayer’s stockholders are being asked to consider and vote upon the Business Combination Proposal to approve and adopt the Business Combination Agreement, among other Stockholder Proposals. See the section titled “Proposal No.1 — The Business Combination Proposal.”

The Thayer Units, Thayer Class A Common Stock and Thayer Warrants are currently listed on Nasdaq under the symbols “TVACU,” “TVAC,” and “TVACW,” respectively. Thayer has applied to list the shares of Combined Company Class A Common Stock and the warrants of the Combined Company on the Nasdaq Capital Market under the symbols “ISPO” and “ISPOW,” respectively, upon the Closing. All outstanding Thayer Units will be separated into their component securities immediately prior to the Closing. Accordingly, Thayer will no longer have any Thayer Units following consummation of the Business Combination, and therefore Thayer will instruct Nasdaq to remove the listing of the Thayer Units immediately following the consummation of the Business Combination. Upon the Closing, Thayer intends to change its name from “Thayer Ventures Acquisition Corporation” to “Inspirato Incorporated.”

This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the proposals to be acted upon at the special meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety. This document also constitutes a prospectus of Thayer with respect to the Combined Company Class A Common Stock and Combined Company Class V Common Stock issuable in connection with the Business Combination.

Q.    When and where is the special meeting?

 

A.

In light of the ongoing health concerns relating to the COVID-19 pandemic and to best protect the health and welfare of Thayer’s stockholders and personnel, the special meeting will be held completely virtually, conducted only via webcast at the following address: https://www.cstproxy.com/tvac/2022. Additionally, you have the option to listen only to the Special Meeting by dialing 1 800-450-7155 (toll-free within the U.S. and Canada) or +1 857-999-9155 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 1862580#, but please note that you cannot vote or ask questions if you choose to participate telephonically. There will be no physical meeting location and you will only be able to access the special meeting by means of remote communication. Thayer stockholders are nevertheless urged to submit their proxies by completing, signing, dating, and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope.

Q.    What matters will stockholders consider at the special meeting?

 

A.

At the Thayer special meeting of stockholders, Thayer will ask its stockholders to vote in favor of the following Stockholder Proposals:

 

   

Proposal No. 1 — The “Business Combination Proposal” — To consider and vote upon a proposal to approve and adopt the Business Combination Agreement, dated as of June 30, 2021, (as may be further

 

11


Table of Contents
Index to Financial Statements
 

amended from time to time, the “Business Combination Agreement”), by and among Thayer, the Blocker Merger Subs, the Company Merger Sub, the Blockers and Inspirato, pursuant to which the Blocker Mergers will be effected and, immediately following the Blocker Mergers, Company Merger Sub will merge with and into Inspirato, with Inspirato as the surviving company, resulting in Inspirato becoming a subsidiary of Thayer.

 

   

Proposal No. 2 — The “Charter Proposal” — To consider and vote upon a proposal to adopt the Proposed Certificate of Incorporation in the form attached hereto as Annex B.

 

   

Proposal No. 3 — The “Governance Proposals” — To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the Proposed Certificate of Incorporation and the Proposed Bylaws, presented separately in accordance with SEC requirements (collectively, the “Governance Proposals”):

 

   

Proposal No. 3A — Name Change Charter Amendment — To change Thayer’s name to “Inspirato Incorporated”;

 

   

Proposal No. 3B — Authorized Share Charter Amendment — To increase the number of authorized shares of our Class A Common Stock, to authorize a new class of common stock called the Class V Common Stock, and to increase the number of authorized shares of our “blank check” preferred stock;

 

   

Proposal No. 3C — Actions by Stockholders Charter Amendment — To require that stockholders only act at annual and special meeting of the corporation and not by written consent;

 

   

Proposal No. 3D — Corporate Opportunity Charter Amendment — To eliminate the current limitations in place on the corporate opportunity doctrine;

 

   

Proposal No. 3E — Voting Thresholds Charter Amendment — To increase the required vote thresholds for stockholders approving amendments to the Proposed Certificate of Incorporation and the Proposed Bylaws to 66 2/3%;

 

   

Proposal No. 3F — Classified Board Amendment — To provide that the Combined Company Board be divided into three classes with only one class of directors being elected in each year and each class serving a three-year term; and

 

   

Proposal No. 3G — Additional Governance Amendments — To approve all other changes in connection with the replacement of the Existing Thayer Bylaws and Existing Thayer Certificate of Incorporation with the Proposed Certificate of Incorporation and the Proposed Bylaws, including adopting Delaware as the exclusive forum for certain shareholder litigation.

 

   

Proposal No. 4 — The “Incentive Plan Proposal” — To consider and vote upon a proposal to approve the Inspirato 2021 Equity Incentive Plan, including the authorization of the initial share reserve under such plan.

 

   

Proposal No. 5 — The “ESPP Proposal” — To consider and vote upon a proposal to approve the Inspirato 2021 Employee Stock Purchase Plan, including the authorization of the initial share reserve under such plan.

 

   

Proposal No.6 — The “Nasdaq Proposals” — To consider and vote upon the following proposals, presented separately:

 

   

Proposal No. 6A — Merger Shares Issuance — To issue Combined Company Class A Common Stock and Combined Company Class V Common Stock in connection with the Mergers pursuant to the Business Combination Agreement; and

 

   

Proposal No. 6B — PIPE Shares Issuance — To issue Thayer Class A Common Stock to the investors in the PIPE (as defined herein).

 

12


Table of Contents
Index to Financial Statements
   

Proposal No. 7 — The “Adjournment Proposal” — A proposal to adjourn the special meeting of Thayer’s stockholders to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote at such special meeting.

Thayer may not consummate the Business Combination unless the Business Combination Proposal, the Charter Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals are approved at the special meeting, each of which is conditioned upon all such proposals having been approved at the special meeting. The approval of the Charter Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the outstanding shares of Thayer Class A Common Stock as of the Record Date and the affirmative vote of the holders of a majority of the outstanding shares of Thayer Class B Common Stock as of the Record Date, each voting as a separate class. We determined to provide for a separate vote of the Charter Proposal by the holders of Thayer Class A Common Stock following consideration of stockholder feedback regarding the Charter Proposal.

The approval of the Business Combination Proposal, the Governance Proposals, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals requires the affirmative vote (virtually in person or by proxy) of holders of a majority of the shares of Thayer Capital Stock that are voted at the special meeting of stockholders. The Adjournment Proposal is not conditioned on the approval of any other Stockholder Proposal set forth in this proxy statement/prospectus. The Business Combination is not conditioned on the separate approval of the Governance Proposals (separate and apart from approval of the Charter Proposal).

Thayer will hold a special meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.

The vote of stockholders is important. Stockholders are encouraged to vote by submitting their proxy as soon as possible after carefully reviewing this proxy statement/prospectus.

Q.    Why is Thayer proposing the Governance Proposals?

 

A.

As required by applicable SEC guidance, Thayer is requesting that its stockholders vote upon, on a non-binding, advisory basis, a proposal to approve certain governance provisions contained in the Proposed Certificate of Incorporation and Proposed Bylaws that may reasonably be considered to materially affect stockholder rights and therefore require a non-binding, advisory basis vote pursuant to SEC guidance. This non-binding, advisory vote is not otherwise required by Delaware law and is separate and apart from the Charter Proposal, but consistent with SEC guidance, Thayer is submitting these provisions to its stockholders separately for approval. However, the stockholder vote regarding this proposal is an advisory vote and is not binding on Thayer or its board of directors (separate and apart from the approval of the Charter Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of the Governance Proposals (separate and apart from approval of the Charter Proposal).

Q.    Are any of the proposals conditioned on one another?

 

A.

Thayer may not consummate the Business Combination unless the Business Combination Proposal, the Charter Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals are approved at the special meeting, each of which is conditioned upon all such proposals having been approved at the special meeting. The approval of the Charter Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the outstanding shares of Thayer Class A Common Stock as of the Record Date and the affirmative vote of the holders of a majority of the outstanding shares of Thayer Class B Common Stock as of the Record Date, each voting as a separate class. We determined to provide for a separate vote of the Charter Proposal by the holders of Thayer Class A Common Stock following consideration of stockholder feedback regarding the Charter Proposal. The approval of the Business Combination Proposal, the Governance Proposals, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals requires the affirmative vote (virtually in person or by proxy) of holders of a majority of

 

13


Table of Contents
Index to Financial Statements
  the shares of Thayer Capital Stock that are voted at the special meeting of stockholders. The Adjournment Proposal is not conditioned on the approval of any other Stockholder Proposal set forth in this proxy statement/prospectus. The Business Combination is not conditioned on the separate approval of the Governance Proposals (separate and apart from approval of the Charter Proposal).

It is important for you to note that in the event the Business Combination Proposal is not approved, then Thayer will not consummate the Business Combination. If Thayer does not consummate the Business Combination and fails to complete an initial business combination by June 15, 2022 or obtain the approval of Thayer stockholders to extend the deadline for Thayer to consummate an initial business combination, then Thayer will be required to dissolve and liquidate.

Q.    What will happen upon the consummation of the Business Combination?

 

A.

The Business Combination consists of a series of transactions pursuant to which Thayer will acquire a majority of the equity interests of Inspirato through a series of mergers, with Inspirato becoming a direct subsidiary of Thayer, and Thayer changing its name to “Inspirato Incorporated.”

Q.    What consideration will be received in connection with the Business Combination?

 

A.

At the Closing, (i) the equity interests of each Blocker will be cancelled and converted into the right to receive (A) shares of Combined Company Class A Common Stock based on such Blocker’s pro rata ownership of Inspirato (adjusted upward for cash and cash equivalents of such Blocker and adjusted downward for debt and transaction expenses of such Blocker), plus (B) cash, if any, based on such Blocker’s pro rata ownership, plus (C) certain rights under the Tax Receivable Agreement; (ii) the outstanding units of Inspirato (other than any units held by Thayer or any of its subsidiaries following the Blocker Mergers) will be cancelled and converted into the right to receive (1) New Common Units of Inspirato, (2) cash, if any, (3) shares of Combined Company Class V Common Stock and (4) certain rights under the Tax Receivable Agreement; and (iii) each option to purchase Inspirato Units will be converted into an option to purchase Combined Company Class A Common Stock. For additional information, please see the section titled “The Business Combination Agreement — Consideration to be Received in the Business Combination — Holders of Inspirato Options” of this proxy statement / prospectus.

The aggregate consideration to be paid to Inspirato unitholders, including the Blockers, is based on an equity valuation of Inspirato equal to $1.07 billion, subject to (i) an upward adjustment for the aggregate amount of Transaction Expenses incurred by Thayer in excess of $15 million; (ii) an upward adjustment for the greater of (1) $0 and (2) the amount, if any, by which (A) cash and cash equivalents of Inspirato (together with its subsidiaries), minus (B) Distributed Cash Amount (as defined below), minus (C) indebtedness of Inspirato for borrowed money or evidenced by notes, bonds, debentures or similar contracts or instruments, exceeds $20 million; and (iii) an upward adjustment for the aggregate amount of exercise price that would be paid to Inspirato in respect of the exercise in full of all Inspirato Options immediately prior to the Business Combination. The “Distributed Cash Amount” is an amount in cash to be determined by Inspirato, provided that Inspirato may not distribute more than $5 million without Thayer’s consent if Inspirato’s cash and cash equivalents (after such distribution) would be less than $20 million.

Following the completion of the Business Combination, as described above, our organizational structure will be what is commonly referred to as an umbrella partnership corporation (or UP-C) structure, which is often used by entities classified as a partnership for U.S. federal income tax purposes, such as Inspirato, undertaking an initial public offering, an initial business combination with a SPAC or other going-public transactions. This UP-C structure will allow the Flow-Through Sellers (as defined below in the section titled “The Business Combination Agreement  Description of the Business Combination Agreement; Structure of the Business Combination”) to retain their equity ownership in Inspirato in the form of New Common Units. Each Flow-Through Seller also will hold a number of shares of Combined Company Class V Common Stock equal to the number of New Common Units held by such Flow-Through Seller, which will have no economic value, but will entitle the holder thereof to one (1) vote per share at any meeting of the shareholders of the PubCo. The Blocker Sellers, by contrast, hold Combined Company Class A Common

 

14


Table of Contents
Index to Financial Statements

Stock. The parties agreed to structure the Business Combination in this manner to permit the Flow-Through Sellers to continue to realize the tax benefits associated with their ownership in an entity that is treated as a partnership for U.S. federal income tax purposes and PubCo, as a holder of New Common Units, will realize the same tax benefits. The UP-C structure also provides potential future tax benefits to PubCo (85% of which PubCo will give up and pay to the Flow-Through Sellers pro rata based on their ownership of New Common Units pursuant to the Tax Receivable Agreement), which are expected to arise when the Flow-Through Sellers ultimately exchange their New Common Units and Combined Company Class V Common Stock for shares of Combined Company Class A Common Stock. Because the New Common Units are issued by Inspirato and not PubCo, the New Common Units could be entitled to different after-tax economics on a per unit basis compared to the Combined Company Class A Common Stock on a per share basis (for example, as a result of PubCo being subject to corporate income tax, and the potential that holders of New Common Units will receive distributions, including tax distributions, directly from Inspirato but PubCo may not make corresponding distributions to the holders of Combined Company Class A Common Stock). See the section entitled “Risk Factors  Risks Related to Our Organizational Structure” for additional information on our organizational structure, including the Tax Receivable Agreement.

The A&R Inspirato LLCA will provide unitholders in Inspirato (other than PubCo and its subsidiaries) the right to exchange New Common Units, together with the cancellation of an equal number of shares of Combined Company Class V Common Stock, for an equal number of shares of Combined Company Class A Common Stock (or cash), subject to certain restrictions set forth therein. Each share of Combined Company Class A Common Stock will provide the holder the rights to vote, receive dividends, and share in distributions in connection with a liquidation and other stockholder rights with respect to the Combined Company.

Q.    What is the Tax Receivable Agreement?

 

A.

Concurrently with the completion of the Business Combination, PubCo will enter into the Tax Receivable Agreement, in substantially the form attached to this proxy statement/prospectus as Annex H. Pursuant to the Tax Receivable Agreement, PubCo will be required to pay the Flow-Through Sellers and the Blocker Sellers 85% of the tax savings that PubCo realizes as a result of increases in tax basis in Inspirato’s and its subsidiaries’ assets resulting from the sale of Inspirato Units for the consideration paid pursuant to the Business Combination Agreement and the future exchange of New Common Units for shares of Combined Company Class A Common Stock (or cash) pursuant to the A&R Inspirato LLCA, and certain pre-existing tax attributes of the Blockers, as well as certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless PubCo exercises its right to terminate the Tax Receivable Agreement for an amount representing the present value of anticipated future tax benefits under the Tax Receivable Agreement or certain other acceleration events occur. For more information on the Tax Receivable Agreement, please see the section entitled “Certain Agreements Related to the Business Combination  Tax Receivable Agreement.”

Q.    Why is Thayer proposing the Business Combination Proposal?

 

A.

Thayer was organized for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities. Thayer is not limited to a particular industry or geographic region, but focused its search on businesses in industries that complement its management team’s background, and it intends to capitalize on the ability of its management team to identify and acquire a business, focusing on the travel and transportation industries where its management has extensive investment experience.

Thayer received net proceeds of approximately $176 million from its IPO, including from the sale of the Private Warrants. In accordance with the Existing Thayer Certificate of Incorporation, Public Stockholders may redeem the Public Shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account as of two business days prior to the Closing upon the consummation

 

15


Table of Contents
Index to Financial Statements

of the Business Combination. See the question titled “What happens to the funds held in the Trust Account upon consummation of the Business Combination?” for more information.

There are currently 17,250,000 shares of Thayer Class A Common Stock issued and outstanding and 4,312,500 shares of Thayer Class B Common Stock issued and outstanding. In addition, there are currently 15,800,000 Thayer Warrants issued and outstanding, consisting of 8,625,000 Public Warrants and 7,175,000 Private Warrants. Each Thayer Warrant entitles the holder thereof to purchase one share of Thayer Class A Common Stock at a price of $11.50 per share. The Thayer Warrants will become exercisable 30 days after the completion of a business combination, and expire at 5:00 p.m., New York City time, five years after the completion of a business combination or earlier upon redemption or liquidation.

Under the Existing Thayer Certificate of Incorporation, all Public Stockholders have the opportunity to redeem their Public Shares upon the consummation of a business combination. The Public Warrants are non-redeemable. The Private Warrants are non-redeemable so long as they are held by their initial purchasers or their permitted transferees.

 

Q.

Did Thayer’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A.

Thayer’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. In analyzing the Business Combination, Thayer’s board of directors and management conducted due diligence on Inspirato and researched the industry in which Inspirato operates and concluded that the Business Combination was in the best interest of Thayer’s stockholders. In reaching this conclusion, Thayer’s board of directors considered a number of factors and a broad range of information, including publicly available information and information provided by Inspirato. Thayer’s board of directors believes that based upon the financial skills and background of its directors, it was qualified to conclude that the Business Combination was fair from a financial perspective to its stockholders. Thayer’s board of directors also determined, without seeking a valuation from a financial advisor, that Inspirato’s fair market value was at least 80% of Thayer’s net assets, excluding any taxes payable on interest earned. Accordingly, investors will be relying on the judgment of Thayer’s board of directors, as described above, in valuing Inspirato’s business and assuming the risk that Thayer’s board of directors may not have properly valued such business. For a complete discussion of the factors utilized by Thayer’s board of directors in approving the Business Combination, see the section titled “Proposal No. 1 — The Business Combination Proposal — The Business Combination — Thayer’s Board of Directors’ Reasons for the Approval of the Business Combination.”

 

Q.

Who will have the right to nominate or appoint directors to the PubCo’s board after the consummation of the Business Combination?

 

A.

The holders of the Combined Company Class A Common Stock and Combined Company Class V Common Stock voting together as a single class (or, if the holders of one or more series of Combined Company Preferred Stock are entitled to vote together with holders of the Combined Company Common Stock, as a single class with the holders of such other series of Combined Company Preferred Stock) shall have the exclusive right to vote for the election of directors.

The board of directors of the PubCo (the “PubCo Board”) shall be divided into three classes, as nearly equal in number as possible and designated Class I, Class II and Class III. The PubCo Board is authorized to assign members of the PubCo Board already in office to Class I, Class II or Class III. The term of the initial Class I directors shall expire at the first annual meeting of the stockholders of the PubCo following the Effective Time and the term of the initial Class III directors shall expire at the third annual meeting of the stockholders of the PubCo following the Effective Time.

At each annual meeting of the stockholders of the PubCo, beginning with the first annual meeting of the stockholders of the PubCo following the Effective Time, each of the successors meeting of the stockholders of the PubCo following the Effective Time, the term of the initial Class II directors shall expire at the

 

16


Table of Contents
Index to Financial Statements

second annual elected to the class of directors whose term expires at that annual meeting shall be elected for a three-year term or until the election and qualification of their respective successors in office, subject to their earlier death, resignation or removal. If the number of directors that constitutes the PubCo Board is changed, any increase or decrease shall be apportioned by the PubCo Board among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors constituting the PubCo shorten the term of any incumbent director.

Whenever the holders of one or more series of Combined Company Preferred Stock shall have the right, voting separately by class or series, to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships shall be governed by the terms of such series of Combined Company Preferred Stock as set forth in the Combined Company’s certificate of incorporation then in effect.

Q.    Do I have redemption rights?

 

A.

If you are a Public Stockholder, you may redeem your Public Shares for cash equal to your pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of the IPO, as of two business days prior to the Closing, including interest earned on the funds held in the Trust Account and not previously released to Thayer to pay its income taxes or any other taxes payable, upon the Closing. The per share amount Thayer will distribute to holders who properly redeem their shares will not be reduced by the deferred underwriting commissions Thayer will pay to the underwriters of its IPO if the Business Combination is consummated. Holders of the outstanding Public Warrants do not have redemption rights with respect to such warrants in connection with the Business Combination. The Sponsor has agreed to waive its redemption rights with respect to its shares and any Public Shares that it may have acquired during or after the IPO in connection with the completion of Thayer’s business combination. The shares of Thayer Capital Stock purchased by the Sponsor in connection with our IPO will be excluded from the pro rata calculation used to determine the per share redemption price. For illustrative purposes, based on funds in the Trust Account of approximately $176 million on September 30, 2021, the estimated per share redemption price would have been approximately $10.20. Additionally, Public Shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise, holders of such shares will only be entitled to a pro rata portion of the Trust Account, including interest (which interest shall be net of taxes payable by Thayer), in connection with the liquidation of the Trust Account.

Q.    Will how I vote affect my ability to exercise redemption rights?

 

A.

No. You may exercise your redemption rights whether you vote your Public Shares for or against the Business Combination Proposal and other Stockholder Proposals or do not vote your shares. As a result, the Business Combination Proposal can be approved by stockholders who will redeem their Public Shares and no longer remain stockholders, leaving stockholders who choose not to redeem their Public Shares holding shares in a company with a less liquid trading market, fewer stockholders, less cash, and the potential inability to meet the listing standards of Nasdaq.

Q.    How do I exercise my redemption rights?

 

A.

In order to exercise your redemption rights, you must, prior to            Eastern time on                    , 2022 (two business days before the special meeting of stockholders), (i) submit a written request to Thayer’s transfer agent to redeem your Public Shares for cash, and (ii) deliver your stock to Thayer’s transfer agent physically or electronically through The Depository Trust Company (“DTC”). For the address of Continental Stock Transfer & Trust Company, Thayer’s transfer agent, see the question “Who can help answer my questions?” below. Thayer requests that any requests for redemption include the identity as to the beneficial owner making such request. Electronic delivery of your shares generally will be faster than delivery of physical stock certificates.

 

17


Table of Contents
Index to Financial Statements

A physical stock certificate will not be needed if your stock is delivered to Thayer’s transfer agent electronically. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and Thayer’s transfer agent will need to act to facilitate the request. It is Thayer’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because Thayer does not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. Under the Existing Thayer Bylaws, Thayer is required to provide at least 10 days advance notice of any stockholder meeting, which would be the minimum amount of time a stockholder would have to determine whether to exercise redemption rights. Accordingly, if it takes longer than anticipated for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their shares. In the event that a stockholder fails to comply with the various procedures that must be complied with in order to validly tender or redeem Public Shares, its shares may not be redeemed.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with Thayer’s consent, until the vote is taken with respect to the Business Combination. If you delivered your shares to Thayer’s transfer agent for redemption and decide within the required timeframe not to exercise your redemption rights, you may request that Thayer’s transfer agent return the shares (physically or electronically). You may make such request by contacting Thayer’s transfer agent at the phone number or address listed under the question, “Who can help answer my questions?”.

Q.    What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A.

The U.S. federal income tax consequences of exercising your redemption rights depend on your particular facts and circumstances. See the section titled “Material U.S. Federal Income Tax Considerations of the Redemption Rights and Blocker Mergers.” You are urged to consult your tax advisor regarding the tax consequences of exercising your redemption rights.

Q.    If I hold Thayer Warrants, can I exercise redemption rights with respect to my warrants?

 

A.

No. Holders of Thayer Warrants have no redemption rights with respect to the Thayer Warrants; however, if such Holders choose to redeem their shares of Thayer Capital Stock to which the Thayer Warrants entitle them, those Holders may still exercise their Thayer Warrants if the Business Combination is consummated.

Q.    Do I have appraisal rights if I object to the proposed Business Combination?

 

A.

No. There are no appraisal rights available to holders of shares of Thayer Capital Stock in connection with the Business Combination.

 

Q.    What

happens to the funds held in the Trust Account upon consummation of the Business Combination?

 

A.

If the Business Combination is consummated, the funds held in the Trust Account will be released to pay (i) Thayer stockholders who properly exercise their redemption rights and (ii) certain expenses incurred by Inspirato and Thayer in connection with the Business Combination, to the extent not otherwise paid prior to the Closing. The remaining funds available for release from the Trust Account will be used for general corporate purposes of the Combined Company following the Business Combination.

Q.    Will Thayer obtain new financing in connection with the Business Combination?

 

A.

PIPE Subscribers have committed to purchase an aggregate of 8,950,384 shares of Thayer Class A Common Stock in the PIPE at a purchase price of $10.00 per share, for an aggregate purchase price of approximately $89.5 million.

 

18


Table of Contents
Index to Financial Statements

Q.    What happens to the proceeds from the PIPE upon consummation of the Business Combination?

 

A.

The PIPE is expected to close concurrently with the Closing. Upon the closing of both the Business Combination and the PIPE, the proceeds from the PIPE will be released to Thayer and will be contributed to Inspirato for general corporate purposes of the Combined Company following the Business Combination.

 

Q.

What happens if a substantial number of Public Stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

 

A.

Public Stockholders may vote in favor of the Business Combination and still exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of Public Stockholders are reduced as a result of redemptions by Public Stockholders.

In no event will Thayer redeem Public Shares in an amount that would cause its net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the exercise of redemption rights. If enough Public Stockholders exercise their redemption rights such that Thayer cannot satisfy the net tangible asset requirement, Thayer would not proceed with the redemption of our Public Shares and the Business Combination, and instead may search for an alternate business combination. Further, a condition to Inspirato’s obligations to consummate the Merger include, among others, that as of the Closing, the aggregate amount of cash in the Trust Account (after reductions for the aggregate amount of payments required to be made in connection with the redemption of Public Shares), plus proceeds from the PIPE actually received by Thayer, will be equal to or greater than $140 million.

As a result of redemptions, the trading market for the Combined Company Class A Common Stock may be less liquid than the market for Thayer Capital Stock was prior to the Business Combination and the Combined Company may not be able to meet the listing standards of a national securities exchange.

Additionally, with fewer funds available from the Trust Account, the capital infusion from the Trust Account into the Combined Company will be reduced and the Combined Company may not be able to achieve its business plan and may require additional financing sooner than currently anticipated.

Q.    What happens if the Business Combination is not consummated?

 

A.

There are certain circumstances under which the Business Combination Agreement may be terminated.

See the section titled “The Business Combination Agreement — Termination” for information regarding the parties’ specific termination rights.

If Thayer does not complete the proposed Business Combination with Inspirato for whatever reason, Thayer would search for another business combination partner with which to complete a business combination. If Thayer does not complete a business combination with Inspirato or another business combination partner by June 15, 2022, Thayer must redeem 100% of the outstanding Public Shares, at a per share price, payable in cash, equal to the amount then held in the Trust Account divided by the number of then outstanding Public Shares. The Sponsor has no redemption rights in the event a business combination is not consummated in the required time period, and, accordingly, its shares of Thayer Capital Stock will be worthless. Additionally, in the event of such a liquidation, as described above, there will be no distribution with respect to outstanding Thayer Warrants and, accordingly, the Thayer Warrants will expire and be worthless.

Q.    What is Inspirato?

 

A.

Inspirato is a subscription-based luxury travel company that provides unique solutions for (i) affluent travelers seeking superior service and certainty across a wide variety of accommodations and experiences and (ii) hospitality suppliers who want to solve pain points that include monetizing excess inventory and efficiently outsourcing the hassle involved in managing rental properties.

 

19


Table of Contents
Index to Financial Statements

For travelers, Inspirato offers access to a diverse portfolio of curated luxury vacation options that, as of September 30, 2021, included over 400 private luxury vacation homes available exclusively to its subscribers, and accommodations at over 430 luxury hotel and resort partners in more than 235 destinations around the world. Inspirato’s portfolio also includes Inspirato Only, featuring one-of-a-kind luxury safaris, cruises, and other experiences, and Bespoke, which offers custom-designed “bucket list” itineraries. Every Inspirato trip comes with Inspirato’s personalized service envelope — including pre-trip planning, on-site concierge, and daily housekeeping — designed to meet the needs of affluent travelers and drive exceptional customer satisfaction.

For more information, see the section titled “Information About Inspirato.”

 

Q.

What equity stake will current Thayer stockholders and Inspirato unitholders have in the Combined Company after the Closing?

 

A.

It is anticipated that, (i) based on Inspirato’s capitalization as of December 28, 2021, (ii) after giving effect to the A&R Inspirato LLCA, (iii) after giving effect to the forfeiture by the Sponsor of 1,500,000 shares of Thayer Class B Common Stock and (iv) after giving effect to certain repurchases by Inspirato prior to the Closing, upon the consummation of the Business Combination and the PIPE, the fully diluted ownership of the PubCo assuming various levels of redemption by Public Stockholders will be as follows:

 

    Redemption Threshold  
    No Redemption(1)     25%(2)     50%(3)     75%(4)     Maximum
Redemption(5)
 
    Shares     %     Shares     %     Shares     %     Shares     %     Shares     %  

Public Stockholders

    17,250,000       11.3       14,125,000       9.4       11,000,000       7.5       7,875,000       5.5       4,750,000       3.4  

Public Warrants(6)

    8,625,000       5.6       8,625,000       5.8       8,625,000       5.9       8,625,000       6.0       8,625,000       6.2  

Total (Public):

    25,875,000       16.9       22,750,000       15.2       19,625,000       13.4       16,500,000       11.5       13,375,000       9.5  

Thayer Class B Common Stock

    2,812,500       1.8       2,812,500       1.9       2,812,500       1.9       2,812,500       2.0       2,812,500       2.0  

Private Warrants(6)

    7,175,000       4.7       7,175,000       4.8       7,175,000       4.9       7,175,000       5.0       7,175,000       5.1  

Total (Sponsor):

    9,987,500       6.5       9,987,500       6.7       9,987,500       6.8       9,987,500       7.0       9,987,500       7.1  

Total PIPE Subscribers:

    8,950,384       5.9       8,950,384       6.0       8,950,384       6.1       8,950,384       6.2       8,950,384       6.4  

Inspirato unitholders(7)

    100,431,932       65.8       100,431,932       67.1       100,431,932       68.6       100,431,932       70.1       100,431,932       71.6  

Assumed Inspirato Options(8)

    7,491,849       4.9       7,491,849       5.0       7,491,849       5.1       7,491,849       5.2       7,491,849       5.3  

Total (Inspirato)(9):

    107,923,781       70.7       107,923,781       72.1       107,923,781       73.7       107,923,781       75.3       107,923,781       77.0  

Total:

    152,736,665       100.0       149,611,665       100.0       146,486,665       100.0       143,361,665       100.0       140,236,665       100.0  

 

(1)

Assumes that no shares of Thayer Class A Common Stock are redeemed.

(2)

Assumes that 3,125,000 shares of Thayer Class A Common Stock, or 25% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed.

(3)

Assumes that 6,250,000 shares of Thayer Class A Common Stock, or 50% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed.

(4)

Assumes that 9,375,000 shares of Thayer Class A Common Stock, or 75% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed.

(5)

Assumes that 12,500,000 shares of Thayer Class A Common Stock are redeemed, which is the maximum amount which may be redeemed while still satisfying the $140 million minimum cash proceeds condition in the Business Combination Agreement.

(6)

Assumes the exercise of all Thayer Warrants for Combined Company Class A Common Stock, which are not exercisable until 30 days after the completion of the Business Combination.

(7)

Represents shares of Combined Company Class A Common Stock issued to the Blocker Sellers, shares of Combined Company Class A Common Stock exchangeable for Combined Company Class V Common Stock and an equal number of New Common Units issued to the Flow-Through Sellers, and Inspirato profits interests holders.

(8)

Assumes the exercise of all the Assumed Inspirato Options for Combined Company Class A Common Stock.

(9)

Excludes PIPE Shares issued to PIPE Subscribers that are also Inspirato unitholders.

Share ownership presented in the table above is only presented for illustrative purposes and are based on a number of assumptions. Thayer cannot predict how many of its public shareholders will exercise their right to have their public shares redeemed for cash. As a result, the redemption amount and the number of Thayer Public Shares redeemed in connection with the Business Combination may differ from the amounts presented above. As such, the ownership percentages and voting power of current Thayer stockholders and Inspirato unitholders may also differ from the presentation above if the actual redemptions are different from these assumptions. Public Stockholders that do not elect to redeem their Public Shares will experience dilution as a result of the Business Combination. The Public Stockholders currently own 80% of Thayer’s Capital Stock. As noted in the above

 

20


Table of Contents
Index to Financial Statements

table, if no Public Stockholders redeem their Public Shares in the Business Combination, the Public Stockholders will go from owning 80% of the Thayer Capital Stock prior to the Business Combination to owning 16.9% of the total shares outstanding of the Combined Company. The Public Stockholders will own shares representing approximately 15.2%, 13.4%, 11.5% and 9.5% of the total shares outstanding of the Combined Company, assuming redemptions equaling 25.0%, 50.0% and 75.0% and Maximum Redemption scenarios as shown above, respectively.

The level of redemption also impacts the effective deferred underwriting fee per Public Share incurred in connection with Thayer’s initial public offering and payable upon the completion of the Business Combination. Thayer incurred $6,900,000 in deferred underwriting fees. Assuming no exercise of Thayer Warrants, in a no redemption scenario, the effective deferred underwriting fee would be approximately $0.40 per Public Share on a pro forma basis (or 4.0% of the value of shares assuming a trading price of $10.00 per share). In a low redemption scenario in which 25% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $0.49 per Public Share on a pro forma basis (or 4.9% of the value of shares assuming a trading price of $10.00 per share). In a medium redemption scenario in which 50% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $0.63 per Public Share on a pro forma basis (or 6.3% of the value of shares assuming a trading price of $10.00 per share). In a high redemption scenario in which 75% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $0.88 per Public Share on a pro forma basis (or 8.8% of the value of shares assuming a trading price of $10.00 per share). In the Maximum Redemption scenario, the effective deferred underwriting fee would be approximately $1.45 per Public Share on a pro forma basis (or 14.5% of the value of shares assuming a trading price of $10.00 per share).

 

Q.    Who

will be the officers and directors of the Combined Company if the Business Combination is consummated?

 

A.

The Business Combination Agreement provides that, upon the Closing, the PubCo Board will be comprised of Brent Handler, Brad Handler, R. Scot (Scot) Sellers, Michael Armstrong, Chris Hemmeter, Ann Payne and Eric Grosse. Immediately following the consummation of the Business Combination, we expect that the following will be the officers of the Combined Company: Brad Handler as Executive Chairman, Brent Handler as Chief Executive Officer, David Kallery as President and R. Webster (Web) Neighbor as Chief Financial Officer. See the section titled “Management After the Business Combination.”

Q.    What conditions must be satisfied to consummate the Business Combination?

 

A.

There are a number of Closing conditions in the Business Combination Agreement, including that Thayer’s stockholders and holders of Inspirato Units have approved and adopted the Business Combination Agreement, the effectiveness of the Registration Statement of which this proxy statement/prospectus forms a part, the receipt of certain regulatory approvals (including, but not limited to, approval for listing on Nasdaq of the Combined Company Class A Common Stock to be issued in connection with the Merger and the expiration or early termination of the waiting period or periods under the HSR Act), that Thayer has at least $5,000,001 of net tangible assets upon Closing and the absence of any injunctions. Other conditions to Inspirato’s obligations to consummate the Merger include, among others, that as of the Closing, the aggregate amount of cash in the Trust Account (after reductions for the aggregate amount of payments required to be made in connection with the redemption of Public Shares), plus proceeds from the PIPE actually received by Thayer, will be equal to or greater than $140 million.

The conditions to Closing with respect to the Blockers will only affect the ability of a particular Blocker Merger to close, rather than the broader transaction. If a Blocker Merger cannot close, such Blocker will be treated as an ordinary unitholder of Inspirato and receive the Per Unit Unitholder Merger Consideration.

 

21


Table of Contents
Index to Financial Statements

Any Closing condition that is required by applicable law (such as the applicable waiting periods under the HSR Act having expired, or there being no governmental order, statute, rule or regulation enjoining or prohibiting the consummation of the Business Combination), cannot be waived by either Thayer or Inspirato. Subject to the foregoing, Closing conditions to Thayer’s obligation to close can be waived by Thayer and Closing conditions to Inspirato’s obligation to close can be waived by Inspirato, but neither party is required to waive any Closing conditions.

For a summary of the conditions that must be satisfied or waived prior to the consummation of the Business Combination, see the section titled “The Business Combination Agreement — Closing Conditions.”

Q.    What happens if I sell my shares of Thayer Capital Stock before the special meeting of stockholders?

 

A.

The Record Date for the special meeting of stockholders will be earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Thayer Capital Stock after the Record Date, but before the special meeting of stockholders, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting of stockholders. However, you will not become a Combined Company Stockholder following the Closing because only Thayer’s stockholders on the Closing Date will become Combined Company Stockholders.

Q.    What vote is required to approve the proposals presented at the special meeting of stockholders?

 

A.

The approval of the Charter Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the outstanding shares of Thayer Class A Common Stock as of the Record Date and the affirmative vote of the holders of a majority of the outstanding shares of Thayer Class B Common Stock as of the Record Date, each voting as a separate class. The class vote of the Thayer Class B Common Stock has already been obtained by a written consent. Accordingly, a Thayer stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting or a broker non-vote will have the same effect as a vote against the Charter Proposal.

The approval of each of the Business Combination Proposal, the Governance Proposals, Incentive Plan Proposal, ESPP Proposal, Nasdaq Proposals and Adjournment Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the shares of Thayer Capital Stock that are voted at the special meeting of stockholders. Accordingly, a Thayer stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting, or a broker non-vote will have no effect on the outcome of any vote on these Stockholder Proposals.

The Sponsor and directors of Thayer collectively own all of the outstanding shares of Thayer Class B Common Stock and have agreed, together with Thayer’ executive officers and directors, to vote all shares of Thayer Capital Stock owned by Sponsor or such director, as applicable, including the Thayer Class B Common Stock, in favor of the Business Combination Proposal, the Charter Proposal, the Governance Proposals, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals. Such holders represent 20% of the issued and outstanding shares of Thayer Capital Stock as of the Record Date. As a result, the affirmative vote of holders of an additional 6,684,375 shares of Thayer Capital Stock, representing only approximately 31% of the remaining shares of Thayer Capital Stock held by the Public Stockholders as of the Record Date, assuming the minimum number of shares required to constitute a quorum are voted at the special meeting, would be required to approve the Business Combination Proposal, the Governance Proposals, the Incentive Plan Proposal, the ESPP Proposal and the Nasdaq Proposals. Separately, assuming the minimum number of shares required to constitute a quorum are voted at the special meeting, the affirmative vote of holders of a majority of Thayer Class A Common Stock, and separately, a majority of Thayer Class B Common Stock would be required to approve the Charter Proposal.

 

22


Table of Contents
Index to Financial Statements
Q.

May Thayer or Thayer’s directors, officers or advisors, or their affiliates, purchase shares in connection with the Business Combination?

 

A.

In connection with the stockholder vote to approve the proposed Business Combination, Thayer’s board of directors, officers, advisors or their affiliates may privately negotiate transactions to purchase shares prior to the Closing from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per share pro rata portion of the Trust Account without the prior written consent of Inspirato. None of the directors, officers or advisors, or their respective affiliates, will make any such purchases when they are in possession of any material non-public information not disclosed to the seller of such shares. Such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of such shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the directors, officers or advisors, or their affiliates, purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per share pro rata portion of the Trust Account. The purpose of these purchases would be to increase the amount of cash available to Thayer for use in the Business Combination.

Q.    How many votes do I have at the special meeting of stockholders?

 

A.

Thayer’s stockholders are entitled to one vote at the special meeting for each share of Thayer Capital Stock held of record as of the Record Date. As of the close of business on the Record Date, there were 17,250,000 shares and 4,312,500 shares outstanding of Thayer Class A Common Stock and Thayer Class B Common Stock, respectively, held by holders of record.

 

Q.    What

interests do the Sponsor and Thayer’s current officers and directors have in the Business Combination?

 

A.

Thayer’s board of directors and executive officers may have interests in the Business Combination that are different from, in addition to, or in conflict with, yours. These interests include:

 

   

While the Sponsor does not have any ownership in Inspirato directly, the Sponsor and Thayer’s board of directors and officers beneficially own an aggregate of 2,812,500 Founder Shares (after giving effect to the agreed upon forfeiture of 1.5 million Founder Shares upon the consummation of the Business Combination), which shares would become worthless if Thayer does not complete a business combination within the applicable time period, as the Founder Shares are not entitled to participate in any redemption or liquidation of the Trust Account. Such shares have an aggregate market value of approximately $28.575 million based on the closing price of Thayer Class A Common Stock of $10.16 on Nasdaq on December 21, 2021, the Record Date for the special meeting of stockholders. Based on such market value, Thayer’s board of directors and officers will have an unrealized gain of approximately $28.4 million on their Thayer securities;

 

   

The Sponsor paid an aggregate of $25,000 ($0.0049 per share) for the Founder Shares which (to the extent not forfeited pursuant to the terms of the Sponsor Side Letter) will have a significantly higher value at the time of the Business Combination, if it is consummated. If Thayer does not consummate the Business Combination or another initial business combination by June 15, 2022, and Thayer is therefore required to be liquidated, these shares would be worthless, as Founder Shares are not entitled to participate in any redemption or liquidation of the Trust Account. Based on the difference in the purchase price of $0.0049 that the Sponsor paid for the Founder Shares, as compared to the purchase price of $10.00 per Unit sold in the IPO, the Sponsor may earn a positive rate of return even if the share price of the Combined Company after the Closing falls below the price initially paid for the Units in the IPO and the Public Stockholders experience a negative rate of return following the Closing of the Business Combination;

 

23


Table of Contents
Index to Financial Statements
   

The Sponsor paid $7,175,000 for its Private Warrants, which would be worthless if a business combination is not consummated by June 15, 2022;

 

   

The Sponsor and Thayer’s directors and officers may be incentivized to complete the Business Combination, or an alternative initial business combination with a less favorable company or on terms less favorable to stockholders, rather than to liquidate, in which case the Sponsor and Thayer’s directors and officers would lose their entire investment. As a result, the Sponsor as well as Thayer’s directors or officers may have a conflict of interest in determining whether Inspirato is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination. The Thayer board of directors was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to Public Stockholders that they approve the Business Combination;

 

   

Thayer’s board of directors will not receive reimbursement for any out-of-pocket expenses incurred by them on Thayer’s behalf incident to identifying, investigating and consummating the Business Combination to the extent such expenses exceed the amount required to be retained in the Trust Account, unless the Business Combination is consummated;

 

   

The Sponsor and certain other holders of Thayer Class B Common Stock have agreed not to redeem any public shares held by them in connection with a stockholder vote to approve a proposed initial business combination;

 

   

The Sponsor and certain other holders of Thayer Class B Common Stock have entered into the Sponsor Side Letter pursuant to which such holders have already agreed to vote their shares in favor of the Business Combination with Inspirato;

 

   

The Registration Rights Agreement will be entered into by the Sponsor;

 

   

The anticipated continuation of Chris Hemmeter as a director of the Combined Company; and

 

   

The continued indemnification of the current directors and officers of Thayer following the Business Combination and the continuation of directors’ and officers’ liability insurance following the Business. Combination.

These interests may influence Thayer’s board of directors in making their recommendation that you vote in favor of the approval of the Stockholder Proposals. You should also read the section titled “Proposal No. 1 — The Business Combination Proposal — The Business Combination — Interests of Thayer’s Directors and Officers in the Business Combination.”

Q.    When is the Business Combination expected to be completed?

 

A.

It is currently anticipated that the Business Combination will be consummated promptly following the special meeting of stockholders, provided that all other conditions to the Closing have been satisfied or waived. For a description of the conditions to the completion of the Business Combination, see the section titled “The Business Combination Agreement — Closing Conditions.”

Q.    What do I need to do now?

 

A.

You are urged to carefully read and consider the information contained in this proxy statement/ prospectus in its entirety, including the financial statements and annexes attached hereto, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

24


Table of Contents
Index to Financial Statements

Q.    How do I vote?

 

A.

If you were a holder of record of Thayer Capital Stock on December 21, 2021, the Record Date for the special meeting of stockholders, you may vote on the Stockholder Proposals online at the virtual special meeting of stockholders or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to virtually attend the special meeting of stockholders and vote online, obtain a proxy from your broker, bank or nominee.

Q.    What will happen if I abstain from voting or fail to vote at the special meeting?

 

A.

At the special meeting of stockholders, Thayer will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present.

The approval of the Charter Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the outstanding shares of Thayer Class A Common Stock as of the Record Date and the affirmative vote of the holders of a majority of the outstanding shares of Thayer Class B Common Stock as of the Record Date, each voting as a separate class. We determined to provide for a separate vote of the Charter Proposal by the holders of Thayer Class A Common Stock following consideration of stockholder feedback regarding the Charter Proposal. Accordingly, a Thayer stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting or a broker non-vote will have the same effect as a vote against these proposals. The approval of each of the Business Combination Proposal, the Governance Proposals, Incentive Plan Proposal, ESPP Proposal, Nasdaq Proposals and Adjournment Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the shares of Thayer Capital Stock that are voted at the special meeting of stockholders. Accordingly, a Thayer stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting, or a broker non-vote will have no effect on the outcome of any vote on these proposals.

Q.    What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A.

Signed and dated proxies received by Thayer without an indication of how the stockholder intends to vote on a proposal will be voted in favor of each of the Stockholder Proposals.

Q.    Do I need to attend the special meeting of stockholders to vote my shares?

 

A.

No. You are invited to virtually attend the special meeting to vote on the proposals described in this proxy statement/prospectus. However, you do not need to attend the special meeting of stockholders to vote your shares. Instead, you may submit your proxy by signing, dating and returning the applicable enclosed proxy card(s) in the pre-addressed postage-paid envelope. Your vote is important. Thayer encourages you to vote as soon as possible after carefully reading this proxy statement/prospectus.

 

Q.

If I am not going to attend the special meeting of stockholders in person, should I return my proxy card instead?

 

A.

Yes. After carefully reading and considering the information contained in this proxy statement/ prospectus, please submit your proxy, as applicable, by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

25


Table of Contents
Index to Financial Statements
Q.

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A.

No. If your broker holds your shares in its name and you do not give the broker voting instructions, under the applicable stock exchange rules, your broker may not vote your shares on any of the Stockholder Proposals. If you do not give your broker voting instructions and the broker does not vote your shares, this is referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining the presence of a quorum at the special meeting of stockholders. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide. However, in no event will a broker non-vote have the effect of exercising your redemption rights for a pro rata portion of the Trust Account, and therefore no shares as to which a broker non-vote occurs will be redeemed in connection with the proposed Business Combination.

Q.    May I change my vote after I have mailed my signed proxy card?

 

A.

Yes. You may change your vote by sending a later-dated, signed proxy card to Thayer’s secretary at the address listed below prior to the vote at the special meeting of stockholders, or attend the virtual special meeting and vote online. You also may revoke your proxy by sending a notice of revocation to Thayer’s secretary, provided such revocation is received prior to the vote at the special meeting. If your shares are held in “street name” by a broker or other nominee, you must contact the broker or nominee to change your vote.

Q.    What happens if I fail to take any action with respect to the special meeting?

 

A.

If you fail to take any action with respect to the special meeting and the Business Combination is approved by stockholders and consummated, you will become a stockholder of the Combined Company and/or your warrants will entitle you to purchase the Combined Company Class A Common Stock. As a corollary, failure to vote either for or against the Business Combination Proposal means you will not have any redemption rights in connection with the Business Combination to exchange your Public Shares for a pro rata share of the aggregate amount of funds held in the Trust Account as of two business days prior to the Closing, including any interest thereon but net of any income or other taxes payable. If you fail to take any action with respect to the special meeting and the Business Combination is not approved, you will continue to be a stockholder and/or warrant holder of Thayer.

Q.    What should I do if I receive more than one set of voting materials?

 

A.

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

Q.    What is the quorum requirement for the special meeting of stockholders?

 

A.

A quorum of Thayer’s stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of stockholders if a majority of the Thayer Capital Stock outstanding and entitled to vote at the meeting is virtually represented in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum.

As of the Record Date for the special meeting, 10,781,251 shares of Thayer Capital Stock will be required to achieve a quorum.

 

26


Table of Contents
Index to Financial Statements

Your shares will be counted towards the quorum only if you submit a valid proxy (or your broker, bank or other nominee submits one on your behalf) or if you vote online at the virtual special meeting of stockholders. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the shares represented by stockholders virtually present at the special meeting or by proxy may authorize adjournment of the special meeting to another date.

 

Q.

What happens to the Thayer Warrants I hold if I vote my shares of Thayer Capital Stock against approval of the Business Combination Proposal and validly exercise my redemption rights?

 

A.

Properly exercising your redemption rights as a Thayer stockholder does not result in either a vote “FOR” or “AGAINST” the Business Combination Proposal. If the Business Combination is not approved and completed, you will continue to hold your Thayer Warrants, and if Thayer does not otherwise consummate an initial business combination by June 15, 2022 or obtain the approval of Thayer stockholders to extend the deadline for Thayer to consummate an initial business combination, Thayer will be required to dissolve and liquidate, and your Thayer Warrants will expire and be worthless.

Q.    Who will solicit and pay the cost of soliciting proxies?

 

A.

Thayer will pay the cost of soliciting proxies for the special meeting of stockholders. Thayer has engaged Morrow Sodali (“Morrow Sodali”) to assist in the solicitation of proxies for the special meeting. Thayer has agreed to pay Morrow Sodali a fee of $30,000. Thayer will reimburse Morrow Sodali for reasonable out-of-pocket expenses and will indemnify Morrow Sodali and its affiliates against certain claims, liabilities, losses, damages and expenses. Thayer also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Thayer Capital Stock for their expenses in forwarding soliciting materials to beneficial owners of Thayer Capital Stock and in obtaining voting instructions from such beneficial owners. Thayer’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q.    Who can help answer my questions?

 

A.

If you have questions about the Stockholder Proposals, or if you need additional copies of this proxy statement/prospectus, the proxy card or the consent card you should contact our proxy solicitor at:

Morrow Sodali LLC

333 Ludlow Street

5th Floor, South Tower

Stamford, CT 06902

Individuals call toll-free (800) 662-5200

Banks and brokers call (203) 658-9400

Email: TVAC.info@investor.morrowsodali.com

You may also contact Thayer at:

Thayer Ventures Acquisition Corporation

25852 McBean Parkway

Valencia, CA 91335

Attention: Secretary

Telephone: (415) 782-1414

To obtain timely delivery, Thayer’s stockholders and warrant holders must request the materials no later than five business days prior to the special meeting.

You may also obtain additional information about Thayer from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”

 

27


Table of Contents
Index to Financial Statements

If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to Thayer’s transfer agent prior to                 , New York time, on the second business day prior to the special meeting of stockholders. If you have questions regarding the certification of your position or delivery of your shares, please contact:

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004

Attention: Mark Zimkind

E-mail: mzimkind@continentalstock.com

 

28


Table of Contents
Index to Financial Statements

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the Business Combination Proposal and the other Stockholder Proposals to be considered at the special meeting of stockholders, you should read this proxy statement/prospectus in its entirety carefully, including the annexes. See also the section titled “Where You Can Find More Information.”

Parties to the Business Combination

Thayer

Thayer is a Delaware corporation and was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities, referred to throughout this proxy statement/prospectus as its initial business combination. Although Thayer may pursue its initial business combination in any industry or geographic location, its focus is on businesses in industries that complement its management team’s background, and it intends to capitalize on the ability of its management team to identify and acquire a business, focusing on the travel and transportation industries where its management has extensive investment experience.

Thayer Class A Common Stock, Thayer Warrants and Thayer Units (each Thayer Unit comprised of one share of Thayer Class A Common Stock and one-half of one Thayer Warrant) are currently listed and trading on Nasdaq under the ticker symbols “TVAC,” “TVACW” and “TVACTU,” respectively. We have applied to continue the listing of the Combined Company Class A Common Stock and warrants of the Combined Company on Nasdaq under the symbols “ISPO” and “ISPOW,” respectively, upon Closing. The Thayer Units will automatically separate into their component securities (one share of Thayer Class A Common Stock and one-half of one Thayer Warrant) upon the Closing and, as a result, will no longer exist. Upon the Closing, Thayer intends to change its name from “Thayer Ventures Acquisition Corporation” to “Inspirato Incorporated.”

The mailing address of Thayer’s principal executive office is 25852 McBean Parkway, Valencia, CA 91335, and its telephone number is (415) 782-1414.

Inspirato

Inspirato is a subscription-based luxury travel company that provides unique solutions for (i) affluent travelers seeking superior service and certainty across a wide variety of accommodations and experiences and (ii) hospitality suppliers who want to solve pain points that include monetizing excess inventory and efficiently outsourcing the hassle involved in managing rental properties.

For travelers, Inspirato offers access to a diverse portfolio of curated luxury vacation options that, as of September 30, 2021, included over 400 private luxury vacation homes available exclusively to our subscribers, and accommodations at over 430 luxury hotel and resort partners in more than 235 destinations around the world. Inspirato’s portfolio also includes Inspirato Only, featuring one-of-a-kind luxury safaris, cruises, and other experiences, and Bespoke, which offers custom-designed “bucket list” itineraries. Every Inspirato trip comes with Inspirato’s personalized service envelope — including pre-trip planning, on-site concierge, and daily housekeeping — designed to meet the needs of affluent travelers and drive exceptional customer satisfaction.

The mailing address of Inspirato’s principal executive office is 1544 Wazee Street Denver, CO 80202, and its telephone number is 303-586-7771.

For more information about Inspirato, see the sections titled “Information About Inspirato” and “Inspirato Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

29


Table of Contents
Index to Financial Statements

Company Merger Sub

Passport Company Merger Sub LLC is a Delaware limited liability company, formed on June 28, 2021, and a wholly owned subsidiary of Thayer. Passport Company Merger Sub does not own any material assets or operate any business.

Blocker Merger Subs

Each Blocker Merger Sub (as defined in the Merger Agreement) is a Delaware corporation, and, other than any Blocker Merger Sub party to a Non-Party Blocker Merger, was incorporated on June 28, 2021 and is a wholly owned subsidiary of Thayer. No Blocker Merger Sub owns any material assets or operates any business.

Blockers

Each of the Blockers was formed solely for the purpose of holding equity interests in Inspirato. None of the Blockers has conducted any business activities other than activities incidental to such Blocker’s ownership of equity interests in Inspirato.

KPCB Blocker was incorporated in Delaware on September 28, 2011 in connection with the investment in Inspirato by Kleiner Perkins Caufield & Byers XIV, LLC and other investors in KPCB XIV Founders Fund, LLC. The principal executive office of KPCB Blocker is located at 2750 Sand Hill Road, Menlo Park, CA, 94025.

IVP Blocker was incorporated in Delaware on January 9, 2012 in connection with the investment in Inspirato by Institutional Venture Partners XIII, L.P. The principal executive office of the IVP Blocker is located at 3000 Sand Hill Road, Building 2, Suite 250, Menlo Park, CA, 94025.

W Capital Blocker was incorporated in Delaware on August 26, 2014 in connection with the investment in Inspirato by W Capital Partners III, LP. The principal executive office of W Capital Blocker is located at 400 Park Avenue, Suite 910, New York, NY 10022.

The Business Combination

The Business Combination Agreement

On June 30, 2021, Thayer, Merger Subs, Blockers and Inspirato entered into the Business Combination Agreement, pursuant to which Thayer will acquire certain of the outstanding equity interests of Inspirato. The Business Combination Agreement and the transactions contemplated thereby were unanimously approved by Thayer’s board of directors, Inspirato’s board of managers, and the governing bodies of each of the Merger Subs.

Prior to the Closing, the units representing equity interests in Inspirato are held by (i) Blockers, which are corporations (or entities treated as corporations for U.S. federal tax purposes) that are affiliated with certain institutional investors, and (ii) other Members of Inspirato, which consist of entities and individuals, including members of management and other employees of Inspirato or its subsidiaries. The Members of Inspirato, other than the Blockers, are referred to in this proxy statement as the “Flow-Through Sellers.”

The Business Combination Agreement provides for, among other things, the following:

 

   

each Blocker will merge with and into a Blocker Merger Sub (including any Non-Party Blocker, if any, that signs a joinder to the Business Combination Agreement with the consent of Inspirato) with the respective Blocker Merger Sub surviving as a wholly owned subsidiary of Thayer (collectively, the

 

30


Table of Contents
Index to Financial Statements
 

“Blocker Mergers”), resulting in the equity interests of each Blocker being cancelled and converted into the right to receive (i) shares of Combined Company Class A Common Stock based on such Blocker’s pro rata ownership of Inspirato (adjusted upward for cash and cash equivalents of such Blocker and adjusted downward for debt and transaction expenses of such Blocker), plus (ii) cash, if any, based on such Blocker’s pro rata ownership, plus (iii) certain rights under the Tax Receivable Agreement;

 

   

immediately following the Blocker Mergers, the Company Merger Sub will merge with and into Inspirato, with Inspirato continuing as the surviving company and subsidiary of Thayer, resulting in (i) each outstanding Inspirato Unit (other than any units held by Thayer or any of its subsidiaries following the Blocker Mergers) being cancelled and converted into a right to receive (A) New Common Units of Inspirato, (B) cash, if any, (C) shares of Combined Company Class V Common Stock and (D) certain rights under the Tax Receivable Agreement; and (ii) each outstanding Inspirato Option being automatically converted into an Assumed Inspirato Option; and

 

   

the limited liability company agreement of Inspirato will be amended and restated to, among other things, reflect the Company Merger and create a seven-person board of managers designated by PubCo and the other members holding outstanding vested New Common Units.

Following the completion of the Business Combination, as described above, our organizational structure will be what is commonly referred to as an umbrella partnership corporation (or UP-C) structure, which is often used by entities classified as a partnership for U.S. federal income tax purposes, such as Inspirato, undertaking an initial public offering, an initial business combination with a SPAC or other going-public transactions. This UP-C structure will allow the Flow-Through Sellers to retain their equity ownership in Inspirato in the form of New Common Units issued pursuant to the Business Combination. Each Flow-Through Seller will also hold a number of shares of Combined Company Class V Common Stock equal to the number of New Common Units held by such Flow-Through Seller, which will have no economic value, but which will entitle the holder thereof to one (1) vote per share at any meeting of the stockholders of PubCo. Those institutional investors in Inspirato who, prior to the Business Combination, held Inspirato Units through a Blocker will, by contrast, hold their equity ownership in PubCo in the form of Combined Company Class A Common Stock. The parties agreed to structure the Business Combination in this manner to permit the Flow-Through Sellers to continue to realize the tax benefits associated with their ownership in an entity that is treated as a partnership for U.S. federal income tax purposes and PubCo, as a holder of New Common Units, will realize the same tax benefits. The UP-C structure also provides potential future tax benefits to PubCo (85% of which PubCo will give up and pay to the Flow-Through Sellers pro rata based on their ownership of New Common Units pursuant to the Tax Receivable Agreement), which are expected to arise when the Flow-Through Sellers ultimately exchange their New Common Units and Combined Company Class V Common Stock for shares of Combined Company Class A Common Stock. Because the New Common Units are issued by Inspirato and not PubCo, the New Common Units could be entitled to different after-tax economics on a per unit basis compared to the Combined Company Class A Common Stock on a per share basis (for example, as a result of PubCo being subject to corporate income tax, and the potential that holders of New Common Units will receive distributions, including tax distributions, directly from Inspirato but PubCo may not make corresponding distributions to the holders of Combined Company Class A Common Stock). See the section entitled “Risk Factors — Risks Related to Our Organizational Structure” for additional information on our organizational structure, including the Tax Receivable Agreement.

For more information about the Business Combination Agreement, see the section titled “The Business Combination Agreement.”

 

31


Table of Contents
Index to Financial Statements

Amendments to the Charter

Pursuant to the Business Combination Agreement, at the Effective Time of the Business Combination, the Existing Thayer Certificate of Incorporation will be further amended and restated to:

 

   

Change Thayer’s name to “Inspirato Incorporated”;

 

   

Authorize the issuance of up to 1,000,000,000 shares of Combined Company Class A Common Stock and 500,000,000 shares of Combined Company Class V Common Stock;

 

   

Authorize the issuance of up to 100,000,000 shares of “blank check” preferred stock, the rights, preferences and privileges of which may be designated from time to time by the PubCo Board;

 

   

Require that stockholders only act at annual and special meeting of the corporation and not by written consent;

 

   

Eliminate the current limitations in place on the corporate opportunity doctrine;

 

   

Increase the required vote thresholds for approving amendments to the charter and bylaws to 66 2/3%; and

 

   

Make certain other changes to the Existing Thayer Certificate of Incorporation.

For more information about these amendments to the Existing Thayer Certificate of Incorporation, see the sections titled “Proposal No. 2 — The Charter Proposal” and “Proposal No. 3 — The Governance Proposals.”

Other Agreements Related to the Business Combination Agreement

A&R Inspirato LLCA

The Amended and Restated Limited Liability Company Agreement of Inspirato, dated as of February 9, 2020 will be amended and restated to, among other things, recapitalize the equity interests of Inspirato into a single class of units immediately prior to the Blocker Mergers. Under the A&R Inspirato LLCA, Inspirato will be managed by a seven-person board of managers designated by PubCo and the other members holding outstanding vested New Common Units (the “Inspirato LLC Board”). Initially, the Inspirato LLC Board will be composed of four persons that were designated by PubCo and three persons that were designated by the members holding a majority of the then outstanding vested New Common Units held by members other than PubCo. PubCo has initially designated Michael Armstrong, Eric Grosse, Christopher Hemmeter and Ann Payne to be on the Inspirato LLC Board immediately after Closing and the members holding a majority of the New Common Units held by members other than PubCo have initially designated Brent Handler, Brad Handler and Scot Sellers to be on the Inspirato LLC Board immediately after Closing. Following the completion of the Business Combination, PubCo will have the ability to increase or decrease the size of the Inspirato LLC Board and adjust the composition of the Inspirato LLC Board as necessary to reflect as closely as reasonably practicable the relative ownership of New Common Units held by PubCo, on the one hand, and the other members that are affiliated with Inspirato immediately prior to the completion of the Business Combination, on the other hand. Except as otherwise specifically required under the A&R Inspirato LLCA, the Inspirato LLC Board will have full and complete control of all affairs of Inspirato. The Inspirato LLC Board will manage and control all business activities and operations of Inspirato and control the day-to-day management of the business of Inspirato and its subsidiaries.

Tax Receivable Agreement

In connection with the Closing, the Flow-Through Sellers, the Blocker Sellers and PubCo will enter into a tax receivable agreement pursuant to which, among other things, PubCo will pay to the other parties thereto 85% of the benefits, if any, that PubCo realizes from certain future tax benefits that may arise from the Business Combination.

 

32


Table of Contents
Index to Financial Statements

If there were an exchange or redemption of all of the outstanding New Common Units (other than those held directly and indirectly by the Combined Company) immediately after the Business Combination, we estimate that the resulting tax benefits to the Combined Company subject to the Tax Receivable Agreement would be approximately $242 million, based on certain assumptions, including but not limited to a $10.00 per share trading price of Combined Company Class A Common Stock, a 21% U.S. federal corporate income tax rate and various estimated applicable state and local income tax rates, no material change in U.S. federal income tax law, and that the Combined Company will have sufficient taxable income to utilize such estimated tax benefits. If the Tax Receivable Agreement were terminated immediately after the closing of the Business Combination and based on the same assumptions used to estimate the tax benefits as described above, the estimated early termination payments would be, in the aggregate, approximately $164 million (calculated using a discount rate equal to one-year LIBOR plus 200 basis points, applied against an undiscounted liability of approximately $206 million, representing an amount equal to 85% of the approximately $242 million of estimated tax benefits to the Combined Company that are subject to the Tax Receivable Agreement). The undiscounted liability of approximately $206 million, which is equal to 85% of the estimated tax benefits to be received by the Combined Company, represents the amount of the estimated tax benefits that would be payable by the Combined Company to the Flow-Through Sellers under the Tax Receivable Agreement, if the Tax Receivable Agreement were terminated immediately after the closing of the Business Combination and based on the same assumptions used to estimate the tax benefits as described above. The foregoing numbers are merely estimates and the actual tax benefits and early termination payments could differ materially.

The Tax Receivable Agreement also covers pre-existing tax attributes of the Blockers, such as net operating losses, that are available to the Combined Company following the closing of the Business Combination. We estimate such tax benefits to the Combined Company subject to the Tax Receivable Agreement would be approximately $21 million, based on certain assumptions, including but not limited to, a 21% U.S. federal corporate income tax rate and various estimated applicable state and local income tax rates, no material change in U.S. federal income tax law, and that the Combined Company will have sufficient taxable income to utilize such estimated tax benefits. The Tax Receivable Agreement payments would be, in the aggregate, approximately $16 million (calculated using a discount rate equal to one-year LIBOR plus 200 basis points, applied against an undiscounted liability of approximately $18 million, representing an amount equal to 85% of the approximately $21 million of estimated tax benefits to the Combined Company that are subject to the Tax Receivable Agreement). The undiscounted liability of approximately $18 million, which is equal to 85% of the estimated tax benefits to be received by the Combined Company, represents the amount of the estimated tax benefits that would be payable by the Combined Company to the Flow- Through Sellers under the Tax Receivable Agreement, if the Tax Receivable Agreement were terminated immediately after the closing of the Business Combination and based on the same assumptions used to estimate the tax benefits as described above. The foregoing numbers are merely estimates and the actual tax benefits and early termination payments could differ materially.

A delay in the timing of exchanges or redemptions of New Common Units, holding other assumptions constant, would be expected to decrease the discounted value of the amounts payable under the Tax Receivable Agreement, as the benefit of the depreciation and amortization deductions would be delayed and the estimated increase in tax basis could be reduced as a result of allocations of Inspirato’s taxable income to the Inspirato Unitholder prior to the exchange or redemption. Increases or decreases in the price per share of Combined Company Class A Common Stock at the time of each exchange or redemption of New Common Units would be expected to result in a corresponding increase or decrease in the undiscounted amounts payable under the Tax Receivable Agreement in an amount equal to 85% of the tax-effected change in price, and it is nearly certain that the actual stock price at the time of each exchange or redemption will deviate from the $10.00 per share assumed above. Increases in the applicable corporate income tax rate and estimated applicable state and local income tax rates would be expected to result in a corresponding increase in the undiscounted amounts payable under the Tax Receivable Agreement as a result of the corresponding increase in the expected net cash savings. The amounts

 

33


Table of Contents
Index to Financial Statements

payable under the Tax Receivable Agreement are dependent upon the Combined Company having sufficient future taxable income to avail itself of the tax benefits on which it is required to make payments under the Tax Receivable Agreement. If Inspirato Incorporated’s projected taxable income is significantly reduced, the expected payments would be reduced to the extent such tax benefits do not result in a reduction of the Combined Company’s future income tax liabilities.

Registration Rights Agreement

In connection with the Closing, certain registration and stockholder rights agreement dated December 10, 2020 will be amended and restated and Thayer, the Sponsor, and certain unitholders of Inspirato will enter into the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, the Combined Company will agree that, within 15 business days after the Closing, the Combined Company will file with the SEC (at the Combined Company’s sole cost and expense) a shelf registration statement registering the resale of certain shares of Combined Company Class A Common Stock from time to time, and Combined Company shall use commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as practicable after the filing thereof. The equityholders party to the Registration Rights Agreement may demand underwritten offerings, including block trades, of their registrable securities by the Combined Company from time to time. Each such group of demanding holders may request to sell all or any portion of their registrable securities in an underwritten offering as long as the total offering price is expected to exceed in the aggregate $20.0 million. Parties subject to the Registration Rights Agreement will be entitled to unlimited piggyback registration rights, subject to certain exceptions in the case of demands for underwritten block trades.

Transaction Support Agreements

On June 30, 2021, certain unitholders of Inspirato, holding a sufficient number of units of Inspirato to comprise the Company Unitholder Majority (as defined in the Business Combination Agreement), entered into Transaction Support Agreements pursuant to which, among other things, such unitholders agreed to vote all of their units of Inspirato (A) in favor of all Stockholder Proposals, (B) against any proposal in opposition to approval of the Stockholder Proposals, (C) against any proposal that would impede or frustrate any provision of the Business Combination Agreement, the Sponsor Side Letter or any Stockholder Proposal, result in a breach of any provision under the Business Combination Agreement or result in any conditions in the Business Combination Agreement to not be fulfilled and (D) against and withhold consent with respect to any competing business combination proposal.

Sponsor Side Letter

On June 30, 2021, the Sponsor entered into the Sponsor Side Letter pursuant to which the Sponsor and certain other holders of existing Thayer Class B Common Stock agreed, among other things, to (i) vote all of their shares of Thayer Class B Common Stock (A) in favor of all Stockholder Proposals, (B) against any proposal in opposition to approval of the Stockholder Proposals, (C) against any proposal that would impede or frustrate any provision of the Business Combination Agreement, the Sponsor Side Letter or any Stockholder Proposal, result in a breach of any provision under the Business Combination Agreement or result in any conditions in the Business Combination Agreement to not be fulfilled and (D) against and withhold consent with respect to any competing business combination proposal, and (ii) with respect to the Sponsor only, forfeit 1,500,000 shares of Thayer Class B Common Stock upon the Closing.

Subscription Agreements

In connection with the execution of the Business Combination Agreement, on June 30, 2021, Thayer entered into separate Subscription Agreements with the PIPE Subscribers, pursuant to which the PIPE Subscribers agreed to purchase, and Thayer agreed to sell to the PIPE Subscribers, the PIPE Shares for a purchase price of $10.00

 

34


Table of Contents
Index to Financial Statements

per share and an aggregate purchase price of approximately $103.5 million in the PIPE. None of the Sponsor, Thayer’s directors and officers or any of their respective affiliates participated in the PIPE. The Subscription Agreements were scheduled to terminate in accordance with their terms on December 30, 2021, if the Business Combination and PIPE had not been consummated by then. In December 2021, Thayer approached the PIPE Subscribers to provide them with the opportunity to extend the termination date of the Subscription Agreements until March 31, 2022 by amending the Subscription Agreements. Thayer obtained signed amendments from PIPE Subscribers representing 8,950,384 shares of Thayer Class A Common Stock in the aggregate, for an updated aggregate purchase price of approximately $89.5 million. There are no material differences in the terms and price of the PIPE Shares to be sold pursuant to the Subscription Agreements and the shares of Thayer Class A Common Stock issued and sold at the time of the IPO.

The closing of the sale of the PIPE Shares pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the concurrent consummation of the Business Combination. The purpose of the PIPE is to raise additional capital for use by the Combined Company following the Closing.

The Subscription Agreements provide that the Combined Company is required to file with the SEC, within fifteen (15) business days after the Closing, a shelf registration statement covering the resale of the PIPE Shares and to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) the 60th day following the filing date thereof if the SEC notifies the Combined Company that it will “review” such registration statement and (ii) the 5th business day after the date the Combined Company is notified (orally or in writing, whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review.

Additionally, pursuant to the Subscription Agreements, the PIPE Investors agreed to waive any claims that they may have at the Closing or in the future as a result of, or arising out of, the Subscription Agreements against Thayer, including with respect to the trust account (other than with respect to any Thayer Class A Common Stock held by such PIPE Subscribers outside of the PIPE Shares).

Interests of Thayer’s Directors, Officers, and Others in the Business Combination

In considering the recommendation of Thayer’s board of directors to vote in favor of the Business Combination, stockholders should be aware that, aside from their interests as stockholders, our directors and officers have interests in the Business Combination that are different from, in addition to, or in conflict with those of other stockholders generally. Our directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, and in recommending to stockholders that they approve the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include:

 

   

While the Sponsor does not have any ownership in Inspirato directly, the Sponsor and Thayer’s board of directors and officers beneficially own an aggregate of 2,812,500 Founder Shares (after giving effect to the agreed upon forfeiture of 1.5 million Founder Shares upon the consummation of the Business Combination), which shares would become worthless if Thayer does not complete a business combination within the applicable time period, as the Founder Shares are not entitled to participate in any redemption or liquidation of the Trust Account. The Sponsor did not receive any compensation in exchange for this agreement to waive its redemption rights. Such shares have an aggregate market value of approximately $28.575 million based on the closing price of Thayer Class A Common Stock of $10.16 on Nasdaq on December 21, 2021, the Record Date for the special meeting of stockholders. Based on such market value, Thayer’s board of directors and officers will have an unrealized gain of approximately $28.4 million on their Thayer securities;

 

   

The Sponsor paid an aggregate of $25,000 ($0.0049 per share) for the Founder Shares which (to the extent not forfeited pursuant to the terms of the Sponsor Side Letter) will have a significantly higher

 

35


Table of Contents
Index to Financial Statements
 

value at the time of the Business Combination, if it is consummated. If Thayer does not consummate the Business Combination or another initial business combination by June 15, 2022, and Thayer is there fore required to be liquidated, these shares would be worthless, as Founder Shares are not entitled to participate in any redemption or liquidation of the Trust Account. Based on the difference in the purchase price of $0.0049 that the Sponsor paid for the Founder Shares, as compared to the purchase price of $10.00 per Unit sold in the IPO, the Sponsor may earn a positive rate of return even if the share price of the Combined Company after the Closing falls below the price initially paid for the Units in the IPO and the Public Stockholders experience a negative rate of return following the Closing of the Business Combination;

 

   

The Sponsor paid $7,175,000 for its Private Warrants, which would be worthless if a business combination is not consummated by June 15, 2022;

 

   

The Sponsor and Thayer’s directors and officers may be incentivized to complete the Business Combination, or an alternative initial business combination with a less favorable company or on terms less favorable to stockholders, rather than to liquidate, in which case the Sponsor and Thayer’s directors and officers would lose their entire investment. As a result, the Sponsor as well as Thayer’s directors or officers may have a conflict of interest in determining whether Inspirato is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination. The Thayer board of directors was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to Public Stockholders that they approve the Business Combination;

 

   

Thayer’s board of directors will not receive reimbursement for any out-of-pocket expenses incurred by them on Thayer’s behalf incident to identifying, investigating and consummating the Business Combination to the extent such expenses exceed the amount required to be retained in the Trust Account, unless the Business Combination is consummated;

 

   

The Sponsor and certain other holders of Thayer Class B Common Stock have agreed not to redeem any public shares held by them in connection with a stockholder vote to approve a proposed initial business combination;

 

   

The Sponsor and certain other holders of Thayer Class B Common Stock have entered into the Sponsor Side Letter pursuant to which such holders have already agreed to vote their shares in favor of the Business Combination with Inspirato;

 

   

The Registration Rights Agreement will be entered into by the Sponsor;

 

   

The anticipated continuation of Chris Hemmeter as a director of the Combined Company; and

 

   

The continued indemnification of the current directors and officers of Thayer following the Business Combination and the continuation of directors’ and officers’ liability insurance following the Business Combination.

These interests may influence Thayer’s board of directors in making their recommendation that you vote in favor of the approval of the Business Combination Proposal and the other Stockholder Proposals. The Thayer Board evaluated each of these interests and concluded that the potential benefits that it expected Thayer and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors and other risks associated with the Business Combination. Accordingly, the Board unanimously resolved that the Business Combination Agreement, the ancillary documents to which Thayer is or will be a party and the transactions contemplated thereby (including the Business Combination) were advisable, fair to, and in the best interests of, Thayer and its stockholders.

 

36


Table of Contents
Index to Financial Statements

Interests of Inspirato’s Directors, Officers, and Others in the Business Combination

When you consider the recommendation of the Thayer Board in favor of adopting the Business Combination Agreement and approving the transactions contemplated thereby, including the Business Combination, you should keep in mind that certain of Inspirato’s directors and officers have interests in the Business Combination that are different from, or in addition to, those of Inspirato’s unitholders generally. These interests include, among other things:

 

   

Certain of Inspirato’s executive officers hold Inspirato Units and profits interests, the treatment of which is described in the section titled “Proposal No. 1 — The Business Combination Proposal.” Please see the section titled “Security Ownership of Certain Beneficial Owners and Management” for more information regarding the Inspirato Units held by Inspirato’s executive officers:

 

   

The non-employee directors of Inspirato have a direct or indirect ownership interest in Inspirato Units, which are described in the section titled “Security Ownership of Certain Beneficial Owners and Management”:

 

   

Certain of Inspirato’s directors and executive officers are expected to become directors and/or executive officers of the Combined Company. Specifically, the following individuals who are currently executive officers of Inspirato are expected to become executive officers of the Combined Company upon the consummation of the Business Combination, serving in the offices set forth opposite their names below:

 

Name

  

Position

Brent Handler

   Chief Executive Officer and Director

Brad Handler

   Executive Chairman and Director

David Kallery

   President

Web Neighbor

   Chief Financial Officer

 

   

In addition, the following individuals who are currently on the board of managers of Inspirato are expected to become directors of the Combined Company upon the consummation of the Business Combination: Brent Handler, Brad Handler, and Scot Sellers.

 

   

At the closing of the Business Combination, Thayer will enter into the Registration Rights Agreement with certain holders of Inspirato Units (in which certain members of Inspirato’s Board and affiliates are included), which provides for registration rights to such unitholders and their permitted transferees.

 

   

Brent Handler Revocable Trust, an entity affiliated with Brent Handler, Inspirato’s Chief Executive Officer and a member of its board of managers, has agreed to purchase 1 million shares of Thayer Class A Common Stock, Brad Handler, Inspirato’s Executive Chairman and a member of its board of managers, has agreed to purchase 395,000 shares of Thayer Class A Common Stock, Elk Sierra, LLC, an entity affiliated with Scot Sellers, a member of Inspirato’s board of managers, has agreed to purchase 84,432 shares of Thayer Class A Common Stock, and David Kallery, Inspirato’s President, has agreed to purchase 25,000 shares of Thayer Class A Common Stock, each pursuant to a Subscription Agreement on substantially the same terms and conditions as the other PIPE Subscribers. KPCB Holdings, Inc., an entity affiliated with KPCB Investment I, Inc., which will beneficently own more than 5% of the outstanding shares of the Combined Company Common Stock after the Business Combination, has agreed to purchase 611,250 shares of Thayer Class A Common Stock, Institutional Venture Partners XIII, L.P., an entity affiliated with Inspirato Group, Inc. (IVP), which will beneficently own more than 5% of the outstanding shares of the Combined Company Common Stock after the Business Combination, has agreed to purchase 570,000 shares of Thayer Class A Common Stock, Alps Investment Holdings LLC, an entity affiliated with Revolution Portico LLC, which will beneficently own more than 5% of the outstanding shares of the Combined Company Common Stock after the Business Combination, has agreed to purchase 500,000 shares of Thayer Class A Common Stock, and W Capital Partners III, L.P., an

 

37


Table of Contents
Index to Financial Statements
 

entity affiliated with W Capital Partners III IBC, Inc., which will beneficently own more than 5% of the outstanding shares of the Combined Company Common Stock after the Business Combination, has agreed to purchase 395,155 shares of Thayer Class A Common Stock, each pursuant to a Subscription Agreement on substantially the same terms and conditions as the other PIPE Subscribers.

Reasons for the Approval of the Business Combination

After careful consideration, Thayer’s board of directors recommends that Thayer stockholders vote “FOR” each Stockholder Proposal being submitted to a vote of the Thayer stockholders at the Thayer special meeting of stockholders.

Thayer’s board of directors considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Business Combination Agreement and the transactions contemplated therein, including, but not limited to, the following:

 

   

Due Diligence. Thayer’s management and board of directors conducted due diligence examinations of Inspirato and held discussions with Inspirato’s management and Thayer’s financial and legal advisors concerning Thayer’s due diligence examination of Inspirato;

 

   

Financial Condition. Thayer’s board of directors also considered factors such as Inspirato’s outlook, financial plan and capital structure, as well as valuation;

 

   

Experienced and Proven Management Team. Thayer’s management and board of directors believe that Inspirato has a strong management team, which is expected to remain with the Combined Company to seek to execute Inspirato’s strategic and growth goals;

 

   

Other Alternatives. Thayer’s board of directors believes, after a thorough review of other business combination opportunities reasonably available to Thayer, that the Business Combination represents the best potential business combination for Thayer and the most attractive opportunity for Thayer based upon the process utilized to evaluate and assess other potential combination partners and Thayer’s board of directors’ belief that such process has not presented a better alternative; and

 

   

Negotiated Transaction. The financial and other terms of the Business Combination Agreement and the fact that such terms and conditions are reasonable and were the product of arm’s-length negotiations between Thayer and Inspirato.

Thayer’s board of directors also considered a variety of uncertainties and risk and other potentially negative factors concerning the Business Combination including, but not limited to, the following:

 

   

Macro-Economic Risks. Macro-economic uncertainty and the effects it could have on the Combined Company’s revenues;

 

   

Redemption Risk. The potential that a significant number of Thayer stockholders elect to redeem their shares prior to the consummation of the Business Combination and pursuant to the Existing Certificate of Incorporation, which would potentially make the Business Combination more difficult or impossible to complete, and/or reduce the amount of cash available to the Combined Company following the Closing;

 

   

Stockholder Vote. The risk that Thayer’s stockholders or Inspirato’s unitholders may fail to provide the respective votes necessary to effect the Business Combination;

 

   

Closing Conditions. The fact that the completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within Thayer’s control, including the closing of the PIPE with the PIPE Commitment;

 

38


Table of Contents
Index to Financial Statements
   

Litigation. The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination;

 

   

Benefits May Not Be Achieved. The risks that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe;

 

   

No Third-Party Valuation or Fairness Opinion. The risk that Thayer did not obtain a third-party valuation or fairness opinion in connection with the Business Combination;

 

   

Thayer Stockholders Receive a Minority Position. The fact that Thayer stockholders will hold a minority position in the Combined Company;

 

   

Potential Conflicts of Interest of Thayer’s Directors and Officers. The potential conflicts of interest of Thayer’s board of directors and officers in the Business Combination (see “Proposal No. 1 – The Business Combination Proposal – The Business CombinationInterests of Thayer’s Directors and Officers in the Business Combination”); and

 

   

Other Risks Associated With the Business Combination. Various other risks associated with the business of Inspirato, as described in the section titled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.

For a more complete description of Thayer’s reasons for the approval of the Business Combination and the recommendation of our board of directors, see the section titled “Proposal No. 1 – The Business Combination Proposal – The Business Combination — Thayer’s Board of Directors’ Reasons for the Approval of the Business Combination.”

Record Date and Voting

You will be entitled to vote or direct votes to be cast at the special meeting of stockholders if you owned shares of Thayer Capital Stock at the close of business on December 21, 2021, which is the Record Date for the special meeting of stockholders. You are entitled to one vote for each share of Thayer Capital Stock that you owned as of the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the Record Date, there were 21,562,500 shares of Thayer Capital Stock outstanding, of which were 17,250,000 shares of Thayer Class A Common Stock and 4,187,500 were shares of Thayer Class B Common Stock held by the Sponsor.

The Sponsor has agreed to vote all of its shares of Thayer Capital Stock in favor of the Business Combination Proposal and the other Stockholder Proposals. Thayer’s issued and outstanding Thayer Warrants do not have voting rights at the special meeting of stockholders.

Quorum and Vote Required for the Stockholder Proposals

A quorum of Thayer’s stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of stockholders if a majority of the Thayer Class A Common Stock outstanding and entitled to vote at the meeting is virtually represented in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum.

The approval of the Charter Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the outstanding shares of Thayer Class A Common Stock as of the Record Date and the affirmative vote of the holders of a majority of the outstanding shares of Thayer Class B Common Stock as of the Record Date, each voting as a separate class. The class vote of the Thayer Class B Common Stock has already

 

39


Table of Contents
Index to Financial Statements

been obtained by a written consent. Accordingly, a Thayer stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting or a broker non-vote will have the same effect as a vote against the Charter Proposal.

The approval of each of the Business Combination Proposal, the Governance Proposals, Incentive Plan Proposal, ESPP Proposal, Nasdaq Proposals and Adjournment Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the shares of Thayer Capital Stock that are voted at the special meeting of stockholders. Accordingly, a Thayer stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting, or a broker non-vote will have no effect on the outcome of any vote on these Stockholder Proposals.

Voting Your Shares

Each share of Thayer Capital Stock that you own in your name entitles you to one vote on each of the proposals for the special meeting of stockholders. Your one or more proxy cards show the number of shares of Thayer Class A Common Stock that you own.

If you are a holder of record, there are two ways to vote your shares of Thayer Capital Stock at the special meeting of stockholders:

 

   

You can vote by completing, signing and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the applicable special meeting(s). If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares of Thayer Capital Stock will be voted as recommended by Thayer’s board of directors. With respect to proposals for the special meeting of stockholders, that means: “FOR” the Business Combination Proposal, “FOR” the Charter Proposal, “FOR” the Governance Proposals, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Nasdaq Proposals and “FOR” the Adjournment Proposal.

 

   

You can virtually attend the special meeting and vote online. However, if your shares of Thayer Capital Stock are held in the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares of Thayer Capital Stock.

Appraisal or Dissenters’ Rights

No appraisal or dissenters’ rights are available to holders of shares of Thayer Capital Stock or Thayer Warrants in connection with the Business Combination.

Solicitation of Proxies

Thayer will pay the cost of soliciting proxies for the special meeting. Thayer has engaged Morrow Sodali to assist in the solicitation of proxies for the special meeting. Thayer has agreed to pay Morrow Sodali a fee of $30,000. Thayer will reimburse Morrow Sodali for reasonable out-of-pocket expenses and will indemnify Morrow Sodali and its affiliates against certain claims, liabilities, losses, damages and expenses. Thayer also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Thayer Capital Stock for their expenses in forwarding soliciting materials to beneficial owners of Thayer Capital Stock and in obtaining voting instructions from those owners. Thayer’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

40


Table of Contents
Index to Financial Statements

Redemption Rights

Under the Existing Thayer Certificate of Incorporation, a Public Stockholder may elect to have the Public Shares then held by such Public Stockholder redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (a) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest not previously released to Thayer to pay its income taxes or any other taxes payable, by (b) the total number of shares of Public Shares. However, Thayer will not redeem any Public Shares to the extent that such redemption would result in Thayer having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of less than $5,000,001. For illustrative purposes, based on funds in the Trust Account of approximately $176 million on September 30, 2021, the estimated per share redemption price would have been approximately $10.20.

If a holder exercises its redemption rights, then such holder will be exchanging its Public Shares for cash and will no longer own Public Shares and will not participate in the future growth of the Combined Company, if any. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Thayer’s transfer agent in accordance with the procedures described herein. See the section titled “The Special Meeting of Thayer Stockholders — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.

Ownership of the Combined Company After the Closing

The diagrams below depict simplified versions of the current organizational structures of Thayer and Inspirato, respectively.

Thayer Organizational Structure

 

LOGO

 

41


Table of Contents
Index to Financial Statements

Inspirato Organizational Structure

 

LOGO

The diagram below depicts a simplified version of our organizational structure immediately following the completion of the Business Combination assuming that no Public Stockholders exercise their redemption rights in connection with the Business Combination.

 

42


Table of Contents
Index to Financial Statements

LOGO

Following the completion of the Business Combination, as described above, our organizational structure will be what is commonly referred to as an umbrella partnership corporation (or UP-C) structure, which is often used by entities classified as a partnership for U.S. federal income tax purposes, such as Inspirato, undertaking an initial public offering, an initial business combination with a SPAC or other going-public transactions. This UP-C structure will allow the Flow-Through Sellers to retain their equity ownership in Inspirato in the form of New Common Units issued pursuant to the Business Combination. Each Flow-Through Seller will also hold a number of shares of Combined Company Class V Common Stock equal to the number of New Common Units held by such Flow-Through Seller, which will have no economic value, but which will entitle the holder thereof to one (1) vote per share at any meeting of the stockholders of PubCo. Those institutional investors in Inspirato who, prior to the Business Combination, held Inspirato Units through a Blocker will, by contrast, hold their equity ownership in PubCo in the form of Combined Company Class A Common Stock. The parties agreed to structure the Business Combination in this manner to permit the Flow-Through Sellers to continue to realize the tax benefits associated with their ownership in an entity that is treated as a partnership for U.S. federal income tax purposes, and PubCo, as a holder of New Common Units, will realize the same tax benefits. The UP-C structure also provides potential future tax benefits to PubCo (85% of which PubCo will give up and pay to the Flow-Through Sellers pro rata based on their ownership of New Common Units pursuant to the Tax Receivable

 

43


Table of Contents
Index to Financial Statements

Agreement), which are expected to arise when the Flow-Through Sellers ultimately exchange their New Common Units and Shares of Combined Company Class V Common Stock for shares of Combined Company Class A Common Stock. Because the New Common Units are issued by Inspirato and not PubCo, the New Common Units could be entitled to different after-tax economics on a per unit basis compared to the Combined Company Class A Common Stock on a per share basis (for example, as a result of PubCo being subject to corporate income tax, and the potential that holders of New Common Units will receive distributions, including tax distributions, directly from Inspirato but PubCo will not make corresponding distributions to the holders of Combined Company Class A Common Stock). See the section entitled “Risk Factors Risks Related to Our Organizational Structure” for additional information on our organizational structure, including the Tax Receivable Agreement. The A&R Inspirato LLCA will provide unitholders in Inspirato (other than PubCo and its subsidiaries) the right to exchange New Common Units, together with the cancellation of an equal number of shares of Combined Company Class V Common Stock, for an equal number of shares of Combined Company Class A Common Stock (or cash), subject to certain restrictions set forth therein.

It is anticipated that, (i) based on Inspirato’s capitalization table as of December 28, 2021, (ii) after giving effect to the A&R Inspirato LLCA, (iii) after giving effect to the forfeiture by Sponsor of 1,500,000 shares of Thayer Class B Common Stock and (iv) after giving effect to certain repurchases by Inspirato prior to the Closing, upon the completion of the Business Combination, the fully diluted ownership of PubCo assuming various levels of redemption by Public Stockholders will be as follows:

 

    Redemption Threshold  
    No Redemption(1)     25%(2)     50%(3)     75%(4)     Maximum
Redemption(5)
 
    Shares     %     Shares     %     Shares     %     Shares     %     Shares     %  

Public Stockholders

    17,250,000       11.3       14,125,000       9.4       11,000,000       7.5       7,875,000       5.5       4,750,000       3.4  

Public Warrants(6)

    8,625,000       5.6       8,625,000       5.8       8,625,000       5.9       8,625,000       6.0       8,625,000       6.2  

Total (Public):

    25,875,000       16.9       22,750,000       15.2       19,625,000       13.4       16,500,000       11.5       13,375,000       9.5  

Thayer Class B Common Stock

    2,812,500       1.8       2,812,500       1.9       2,812,500       1.9       2,812,500       2.0       2,812,500       2.0  

Private Warrants(6)

    7,175,000       4.7       7,175,000       4.8       7,175,000       4.9       7,175,000       5.0       7,175,000       5.1  

Total (Sponsor):

    9,987,500       6.5       9,987,500       6.7       9,987,500       6.8       9,987,500       7.0       9,987,500       7.1  

Total PIPE Subscribers:

    8,950,384       5.9       8,950,384       6.0       8,950,384       6.1       8,950,384       6.2       8,950,384       6.4  

Inspirato unitholders(7)

    100,431,932       65.8       100,431,932       67.1       100,431,932       68.6       100,431,932       70.1       100,431,932       71.6  

Assumed Inspirato Options(8)

    7,491,849       4.9       7,491,849       5.0       7,491,849       5.1       7,491,849       5.2       7,491,849       5.3  

Total (Inspirato)(9):

    107,923,781       70.7       107,923,781       72.1       107,923,781       73.7       107,923,781       75.3       107,923,781       77.0  

Total:

    152,736,665       100.0       149,611,665       100.0       146,486,665       100.0       143,361,665       100.0       140,236,665       100.0  

 

(1)

Assumes that no shares of Thayer Class A Common Stock are redeemed.

(2)

Assumes that 3,125,000 shares of Thayer Class A Common Stock, or 25% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed.

(3)

Assumes that 6,250,000 shares of Thayer Class A Common Stock, or 50% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed.

(4)

Assumes that 9,375,000 shares of Thayer Class A Common Stock, or 75% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed.

(5)

Assumes that 12,500,000 shares of Thayer Class A Common Stock are redeemed, which is the maximum amount which may be redeemed while still satisfying the $140 million minimum cash proceeds condition in the Business Combination Agreement.

(6)

Assumes the exercise of all Thayer Warrants for Combined Company Class A Common Stock, which are not exercisable until 30 days after the completion of the Business Combination.

(7)

Represents shares of Combined Company Class A Common Stock issued to the Blocker Sellers, shares of Combined Company Class A Common Stock exchangeable for Combined Company Class V Common Stock and an equal number of New Common Units issued to the Flow-Through Sellers, and Inspirato profits interests holders.

(8)

Assumes the exercise of all the Assumed Inspirato Options for Combined Company Class A Common Stock.

(9)

Excludes PIPE Shares issued to PIPE Subscribers that are also Inspirato unitholders.

Share ownership presented in the table above is only presented for illustrative purposes and are based on a number of assumptions. Thayer cannot predict how many of its public shareholders will exercise their right to

 

44


Table of Contents
Index to Financial Statements

have their public shares redeemed for cash. As a result, the redemption amount and the number of Thayer Public Shares redeemed in connection with the Business Combination may differ from the amounts presented above. As such, the ownership percentages and voting power of current Thayer stockholders and Inspirato unitholders may also differ from the presentation above if the actual redemptions are different from these assumptions. Public Stockholders that do not elect to redeem their Public Shares will experience dilution as a result of the Business Combination. The Public Stockholders currently own 80% of Thayer’s Capital Stock. As noted in the above table, if no Public Stockholders redeem their Public Shares in the Business Combination, the Public Stockholders will go from owning 80% of the Thayer Capital Stock prior to the Business Combination to owning 16.9% of the total shares outstanding of the Combined Company. The Public Stockholders will own shares representing approximately 15.2%, 13.4%, 11.5% and 9.5% of the total shares outstanding of the Combined Company, assuming redemptions equaling 25.0%, 50.0% and 75.0% and Maximum Redemption scenarios as shown above, respectively.

The level of redemption also impacts the effective deferred underwriting fee per Public Share incurred in connection with Thayer’s initial public offering and payable upon the completion of the Business Combination. Thayer incurred $6,900,000 in deferred underwriting fees. Assuming no exercise of Thayer Warrants, in a no redemption scenario, the effective deferred underwriting fee would be approximately $0.40 per Public Share on a pro forma basis (or 4.0% of the value of shares assuming a trading price of $10.00 per share). In a low redemption scenario in which 25% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $0.49 per Public Share on a pro forma basis (or 4.9% of the value of shares assuming a trading price of $10.00 per share). In a medium redemption scenario in which 50% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $0.63 per Public Share on a pro forma basis (or 6.3% of the value of shares assuming a trading price of $10.00 per share). In a high redemption scenario in which 75% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $0.88 per Public Share on a pro forma basis (or 8.8% of the value of shares assuming a trading price of $10.00 per share). In the Maximum Redemption scenario, the effective deferred underwriting fee would be approximately $1.45 per Public Share on a pro forma basis (or 14.5% of the value of shares assuming a trading price of $10.00 per share).

Please see the section titled “Summary Unaudited Pro Forma Condensed Combined Financial Information” for further information.

Sources and Uses of Funds for the Business Combination     

The following table summarizes the sources and uses for funding the Business Combination. These figures assume no Thayer Public Shares are redeemed. If the actual facts are different from these assumptions, the below figures will be different.

 

Sources

 
(in millions)  

Cash held in the Trust Account(1)

   $ 176  

Cash proceeds from the PIPE

     90  

Rollover equity

     1,070  

Existing balance sheet cash

     79  
  

 

 

 

Total sources

   $ 1,415  
  

 

 

 

Uses

 
   

Cash to balance sheet

   $ 309  

Rollover equity

     1,070  

Transaction Expenses

     36  
  
  

 

 

 

Total uses

   $ 1,415  
  

 

 

 
 

 

(1)

Excludes interest earned.

 

45


Table of Contents
Index to Financial Statements

Emerging Growth Company

Thayer is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), reduced disclosure obligations regarding executive compensation in Thayer’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. Thayer has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies. Thayer, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make it difficult or impossible to compare Thayer’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

The Combined Company will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of Thayer’s initial public offering, (b) in which Thayer has total annual gross revenue of at least $1.07 billion or (c) in which the Combined Company is deemed to be a large accelerated filer, which, in addition to certain other criteria, means the market value of Thayer’s common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter and (2) the date on which the Combined Company has issued more than $1 billion in non-convertible debt securities during the prior three-year period.

Accounting Treatment of the Business Combination

The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Thayer will be treated as the “acquired” company for accounting purposes. This determination is primarily based on the fact that subsequent to the Business Combination, the unitholders of Inspirato will have a majority of the voting power of the Combined Company, Inspirato’s operations will comprise all of the ongoing operations of the Combined Company, and the management of Inspirato will appoint a majority of the PubCo Board. Following the Transaction, Inspirato will be managed by a seven-person board of managers designated by PubCo and the other members holding outstanding vested New Common Units. Accordingly, the financial statements will reflect the net assets of Thayer and Inspirato at historical cost with no goodwill or other intangible assets recognized.

Summary of Risk Factors

In evaluating the Stockholder Proposals, Thayer Stockholders should carefully read this proxy statement/ prospectus and especially consider the factors discussed in the section titled “Risk Factors.” Some of the risks related to Inspirato’s business and industry, and risks of the Combined Company, are summarized below.

 

   

The COVID-19 pandemic and the impact of actions to mitigate the COVID-19 pandemic have materially adversely impacted and will continue to materially adversely impact Inspirato’s business, results of operations, and financial condition.

 

46


Table of Contents
Index to Financial Statements
   

Inspirato has a history of net losses and may not be able to achieve or sustain profitability.

 

   

If Inspirato fails to retain existing subscribers or add new subscribers, its business, results of operations, and financial condition would be materially adversely affected.

 

   

Inspirato’s revenue growth rate has slowed, and it may not increase at the rates Inspirato anticipates in the future or at all.

 

   

The hospitality market is highly competitive, and Inspirato may be unable to compete successfully with its current or future competitors.

 

   

Inspirato may be unable to effectively manage its growth.

 

   

Inspirato’s subscriber support function is critical to the success of Inspirato’s business, and any failure to provide high-quality service could affect its ability to retain its existing subscribers and attract new subscribers.

 

   

Inspirato may not be able to obtain sufficient new and recurring supply of luxury accommodations and experiences or to renew its existing supply of luxury accommodations and experiences.

 

   

Inspirato has limited experience with its pricing models, particularly for Inspirato Pass, and may not accurately predict the long-term rate of subscriber adoption or renewal or the impact these will have on its revenue or results of operations.

 

   

Inspirato depends on its key personnel and other highly skilled personnel, and if Inspirato fails to attract, retain, motivate or integrate its personnel, its business, financial condition and results of operations could be adversely affected.

 

   

Inspirato’s business depends on its reputation and the strength of its brand, and any deterioration could adversely impact its business, financial condition, or results of operations.

 

   

As a result of recognizing revenue in accordance with GAAP, Inspirato’s financial statements may not immediately reflect changes in customer bookings, cancellations and other operating activities.

 

   

The failure to successfully execute and integrate acquisitions could materially adversely affect Inspirato’s business, results of operations, and financial condition.

 

   

Inspirato relies on consumer discretionary spending and any decline or disruption in the travel or hospitality industries or economic downturn would materially adversely affect its business, results of operations, and financial condition.

 

   

The subscription travel market and the market for Inspirato’s subscription offerings is still relatively new, and if it does not continue to grow, grows more slowly than expected or fails to grow as large as expected, Inspirato’s business, financial condition and results of operations could be adversely affected.

 

   

If Inspirato is unable to manage the risks presented by its international business model, its business, results of operations, and financial condition would be materially adversely affected.

 

   

Inspirato may experience significant fluctuations in its results of operations, which make it difficult to forecast its future results.

 

   

The hospitality industry is subject to seasonal and cyclical volatility, which may contribute to fluctuations in Inspirato’s results of operations and financial condition.

 

   

Inspirato’s management has identified material weaknesses in their internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of its financial statements or cause it to fail to meet its periodic reporting obligations.

 

47


Table of Contents
Index to Financial Statements
   

Inspirato faces risks related to Inspirato’s intellectual property.

 

   

Inspirato’s processing, storage, use and disclosure of personal data exposes it to risks of internal or external security breaches and could give rise to liabilities and/or damage to reputation.

 

   

Unfavorable changes in government regulation or taxation of the evolving hospitality, internet and e-commerce industries could harm Inspirato’s results.

 

48


Table of Contents
Index to Financial Statements

SELECTED CONSOLIDATED HISTORICAL FINANCIAL INFORMATION OF INSPIRATO

The selected consolidated historical statements of operations data of Inspirato for the years ended December 31, 2018, 2019 and 2020 and the historical consolidated balance sheet data as of December 31, 2019 and 2020 are derived from Inspirato’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus. The selected consolidated historical statements of operations data of Inspirato for the nine months ended September 30, 2020 and 2021 and the consolidated historical balance sheet data as of September 30, 2021 are derived from Inspirato’s unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement/prospectus. In Inspirato’s management’s opinion, the unaudited interim consolidated historical financial statements include all adjustments necessary to state fairly Inspirato’s financial position as of September 30, 2021 and the results of operations for the nine months ended September 30, 2020 and 2021.

Inspirato’s historical results are not necessarily indicative of the results that may be expected in the future and Inspirato’s results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021 or any other period. You should read the following selected consolidated historical financial data together with the section titled “Inspirato Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Inspirato’s financial statements and related notes included elsewhere in this proxy statement/prospectus.

 

     For the years ended
December 31,
    For the nine months
ended September 30,
 
     2018     2019     2020     2020     2021  
     (in thousands except per share amounts)  

Statement of Operations Data:

  

Revenue

   $ 178,652     $ 217,079     $ 165,590     $ 125,703     $ 166,390  

Cost of revenue

     114,508       138,768       100,599       70,200       110,106  

Gross margin

     64,144       78,311       64,991       55,503       56,284  

General and administrative

     24,193       27,522       25,940       20,819       37,188  

Sales and marketing

     22,893       25,527       14,764       10,908       19,105  

Operations

     19,000       24,396       18,814       14,139       17,336  

Technology and development

     2,220       2,579       2,787       2,016       2,957  

Depreciation and amortization

     4,871       3,471       2,898       2,713       1,876  

Interest, net

     2,232       999       542       282       483  

Warrant fair value (gains) losses

     72       66       (214     —         456  

Gain on forgiveness of debt

     —         —         —         —         (9,518

Net income (loss) and comprehensive income (loss)

   $ (11,337   $ (6,249   $ (540   $ 4,626     $ (13,599
          

Basic weighted average common units

     1,166       1,166       1,166       1,166       1,166  

Basic income (loss) per common unit

   $ (9.72   $ (5.36   $ (0.46   $ 3.97     $ (11.66

Diluted weighted average common units

     1,166       1,166       1,166       2,787       1,166  

Diluted income (loss) per common unit

   $ (9.72   $ (5.36   $ (0.46   $ 1.66     $ (11.66

Statement of Cash Flows Data:

          

Net cash provided by operating activities

   $ 10,050     $ 3,948     $ 11,579     $ 4,569     $ 18,355  

Net cash used in investing activities

     (4,461     (4,425     (3,892     (3,516     (2,695

Net cash provided by (used in) financing activities

     (36     6,076       16,550       9,406       (846

Net increase in cash and cash equivalents

   $ 5,553     $ 5,599     $ 24,237     $ 10,459     $ 14,814  

 

49


Table of Contents
Index to Financial Statements

Balance Sheet Data:

 

     As of December 31,     As of September 30,  
     2019     2020     2021  
     (in thousands)  

Cash and cash equivalents

   $ 40,096     $ 62,772     $ 78,855  

Prepaid subscriber travel

     14,159       11,804       15,660  

Total assets

     107,817       120,606       139,340  

Deferred revenue

     148,197       148,962       173,335  

Debt

     7,000       23,550       13,267  

Total liabilities

     189,492       200,031       229,598  

Temporary equity

     83,780       83,780       83,780  

Members’ deficit

     (165,455     (163,205     (174,038

Total liability, temporary equity and members’ deficit

   $ 107,817     $ 120,606     $ 139,340  

 

50


Table of Contents
Index to Financial Statements

SELECTED HISTORICAL FINANCIAL INFORMATION OF THAYER

The following tables show selected historical financial information of Thayer for the periods and as of the dates indicated. The selected historical financial information of Thayer was derived from the audited historical financial statements of Thayer included elsewhere in this proxy statement/prospectus. The following tables should be read in conjunction with “Thayer Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Thayer’s historical financial statements and the notes and schedules related thereto, included elsewhere in this proxy statement/prospectus.

 

     Nine Months
Ended September 30,
2021
    For the Period
from July 31, 2020
(inception) to
December 31, 2020
 
     (in thousands except per share amounts)  

Statement of Operations Data:

    

Net loss

   $ (3,662   $ (2,959

Net loss per Class A common share – basic and diluted

     (0.17   $ (0.50

Net loss per Class B common share – basic and diluted

   $ (0.17 )     $ (0.50

Statement of Cash Flows Data:

    

Net cash used in operating activities

   $ (846   $ (538

Net cash used in investing activities

     —         (175,950

Net cash provided by financing activities

     —         177,730  
     As of September 30,
2021
    As of December 31,
2020
 
     (in thousands)  

Balance Sheet Data:

    

Total cash

   $ 396     $ 1,242  

Total assets

     176,642       177,702  

Total liabilities

     25,825       23,222  

Total stockholders’ deficit

     (25,132     (21,471

Total liabilities and stockholders’ deficit

   $ 176,642     $ 177,702  

 

51


Table of Contents
Index to Financial Statements

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following selected unaudited pro forma condensed combined financial information (the “selected pro forma data”) gives effect to the reverse acquisition of Inspirato by Thayer as further described below in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The Business Combination will be accounted for as a reverse merger, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Thayer will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of the Inspirato issuing shares for the net assets of Thayer, accompanied by a recapitalization. The net assets of Thayer will be stated at historical cost, with no goodwill or other intangible assets recorded. The selected unaudited pro forma condensed combined balance sheet data as of September 30, 2021 gives effect to the Business Combination and financing activities described above as if they had occurred on September 30, 2021. The selected unaudited pro forma condensed combined statement of operations data for the nine months ended September 30, 2021 and for the year ended December 31, 2020 give effect to the Business Combination and financing activities described above as if they had occurred on January 1, 2020.

The selected pro forma data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information (the “Pro Forma Financial Statements”) of Thayer and Inspirato appearing below and the accompanying notes to the Pro Forma Financial Statements. In addition, the Pro Forma financial statements were based on, and should be read in conjunction with, the historical financial statements and related notes of the entities for the applicable periods included in the proxy statement/prospectus relating to the Business Combination (the “proxy statement/prospectus”). The selected unaudited pro forma data has been presented for informational purposes only and are not necessarily indicative of what the actual combined financial position or results of operations would have been had the Business Combination been completed as of the dates indicated. The Pro Forma Financial Statements do not give effect to any anticipated synergies, operating efficiencies or cost savings that may be associated with the Business Combination. In addition, the selected unaudited pro forma data does not purport to project the future financial position or operating results of Thayer and Inspirato subsequent to the close of the Business Combination.

 

     As of September 30, 2021  
     Assuming No
Redemptions
    Assuming Max
Redemptions
 
     (in thousands)  

Selected Unaudited Pro Forma Combined Balance Sheet Data:

  

Total assets

   $ 369,486     $ 243,994  

Total liabilities

     248,523       248,523  

Total equity (deficit)

   $ 120,963     $ (4,529
     For the year ended
December 31, 2020
    For the nine months
ended September 30,
2021
 
     (in thousands except per share amounts)  

Selected Unaudited Pro Forma Condensed Combined Statement of Operations:

    

Revenue

   $ 165,590     $ 166,390  

No redemptions

    

Weighted average shares outstanding — basic and diluted

     120,610       120,610  

Net loss per share — basic and diluted

   $ (0.05   $ (0.05

Maximum redemptions

    

Weighted average shares outstanding — basic and diluted

     108,061       108,061  

Net loss per share — basic and diluted

   $ (0.05   $ (0.05

 

52


Table of Contents
Index to Financial Statements

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this proxy statement/prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our, our management team’s, Inspirato’s and Inspirato’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus may include, for example, statements about:

 

   

Our ability to consummate the Business Combination;

 

   

The anticipated timing of the Business Combination;

 

   

The expected benefits of the Business Combination;

 

   

The Combined Company’s financial and business performance following the Business Combination, including financial projections and business metrics;

 

   

Changes in Inspirato’s strategy, future operations, financial position, estimated revenue and losses, projected costs, prospects and plans;

 

   

The implementation, market acceptance and success of Inspirato’s business model and growth strategy;

 

   

Inspirato’s expectations and forecasts with respect to the size and growth of the travel and hospitality industry;

 

   

The ability of Inspirato’s services to meet customers’ needs;

 

   

Inspirato’s ability to compete with others in the luxury travel and hospitality industry;

 

   

Inspirato’s ability to grow its market share;

 

   

Inspirato’s ability to attract and retain qualified employees and management;

 

   

Inspirato’s ability to adapt to changes in consumer preferences, perception and spending habits and develop and expand its destination offerings and gain market acceptance of its services, including in new geographies;

 

   

Inspirato’s ability to develop and maintain its brand and reputation;

 

   

Developments and projections relating to Inspirato’s competitors and industry;

 

   

The impact of health epidemics, including the COVID-19 pandemic, on Inspirato’s business and the actions Inspirato may take in response thereto;

 

   

The impact of the COVID-19 pandemic on customer demands for travel and hospitality services;

 

   

Expectations regarding the time during which we will be an emerging growth company under the JOBS Act;

 

   

Inspirato’s future capital requirements and sources and uses of cash;

 

   

Inspirato’s ability to obtain funding for its operations and future growth; and

 

   

Inspirato’s business, expansion plans and opportunities.

These forward-looking statements are based on information available as of the date of this proxy statement/ prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and

 

53


Table of Contents
Index to Financial Statements

uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements in deciding how to vote your proxy or instruct how your vote should be cast on the proposals set forth in this proxy statement/prospectus. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

   

The occurrence of any event, change or other circumstances that could delay the Business Combination or give rise to the termination of the Business Combination Agreement;

 

   

The outcome of any legal proceedings that may be instituted against Thayer following announcement of the proposed Business Combination and transactions contemplated thereby;

 

   

The inability to complete the Business Combination due to the failure to obtain approval of the stockholders of Thayer or to satisfy other conditions to the Closing in the Business Combination Agreement;

 

   

The ability to obtain or maintain the listing of the Combined Company Class A Common Stock on Nasdaq following the Business Combination;

 

   

The risk that the proposed Business Combination disrupts current plans and operations of Inspirato as a result of the announcement and consummation of the transactions described herein;

 

   

Our ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of Inspirato to grow and manage growth profitably following the Business Combination;

 

   

Costs related to the Business Combination;

 

   

Changes in applicable laws or regulations;

 

   

The effect of the COVID-19 pandemic on Inspirato’s business and the economy in general;

 

   

The ability of Inspirato to execute its business model, including market acceptance of its services;

 

   

The Combined Company’s ability to raise capital;

 

   

The possibility that Thayer or Inspirato may be negatively impacted by other economic, business, and/or competitive factors;

 

   

Any changes to U.S. tax laws; and

 

   

Other risks and uncertainties described in this proxy statement/prospectus, including those under the section titled “Risk Factors.”

In addition, statements that “Inspirato believes” or “Thayer believes” and similar statements reflect Inspirato’s or Thayer’s beliefs and opinions on the relevant subject. These statements are based upon information available to Inspirato or Thayer, as the case may be, as of the date of this prospectus/proxy statement, and while Inspirato or Thayer, as the case may be, believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that such party has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

 

54


Table of Contents
Index to Financial Statements

RISK FACTORS

You should carefully review and consider the following risk factors and the other information contained in this proxy statement/prospectus, including the financial statements and notes to the financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the special meeting. Certain of the following risk factors apply to the business and operations of Inspirato and will also apply to the business and operations of Combined Company following the consummation of the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition and results of operations of Combined Company following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by Thayer and Inspirato that later may prove to be incorrect or incomplete. Thayer and Inspirato may face additional risks and uncertainties that are not presently known to such entity, or that are currently deemed immaterial, which may also impair our business or financial condition.

Unless the context otherwise requires, all references to “we,” “us,” or “our” in this section refer to Thayer.

Risks Related to Inspirato’s Business and Industry

Inspirato’s forecasts and projections are based upon assumptions, analyses and estimates developed by its management. If these assumptions, analyses or estimates prove to be incorrect or inaccurate, Inspirato’s actual results may differ materially from those forecasted or projected.

Inspirato’s forecasts and projections, including projected annual recurring revenue (“ARR”), margins, profitability, cash flows and the anticipated market opportunity, growth and penetration, are subject to significant uncertainty and are based on assumptions, analyses and estimates developed by Inspirato’s management, including with reference to third-party forecasts, any or all of which may prove to be incorrect or inaccurate. These include assumptions, analyses and estimates about future pricing, the type and size of future properties, the terms of future leases or property acquisitions, local regulatory environments, and future costs, all of which are subject to a wide variety of business, regulatory and competitive risks and uncertainties. If these assumptions, analyses or estimates prove to be incorrect or inaccurate, Inspirato’s actual results may differ materially from those forecasted or projected, adversely affecting the value of the Combined Company’s common stock.

The COVID-19 pandemic and the impact of actions to mitigate the COVID-19 pandemic have materially adversely impacted and will continue to materially adversely impact Inspirato’s business, results of operations, and financial condition.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. In an attempt to limit the spread of the virus, governments have imposed various restrictions, including emergency declarations at the federal, state, and local levels, school and business closings, quarantines, “shelter at home” orders, restrictions on travel, limitations on social or public gatherings, and other social distancing measures, which have had and may continue to have a material adverse impact on Inspirato’s business and operations and on travel behavior and demand.

The COVID-19 pandemic, which has required and may continue to require cost reduction measures, has materially adversely affected Inspirato’s near-term operating and financial results and will continue to materially adversely impact Inspirato’s long-term operating and financial results. In light of the evolving nature of COVID-19 and the uncertainty it has produced around the world, Inspirato does not believe it is possible to predict the COVID-19 pandemic’s cumulative and ultimate impact on its future business, results of operations, and financial condition. The extent of the impact of the COVID-19 pandemic on Inspirato’s business and financial results will depend largely on future developments, including the duration and extent of the spread of

 

55


Table of Contents
Index to Financial Statements

COVID-19 both globally and within the U.S., the prevalence of local, national, and international travel restrictions, significantly reduced flight volume, the impact on capital and financial markets and on the U.S. and global economies, foreign currencies exchange, and governmental or regulatory orders that impact Inspirato’s business, all of which are highly uncertain and cannot be predicted. Moreover, even after all shelter-in-place and quarantine orders and travel bans, restrictions, and advisories are completely lifted, demand for Inspirato’s offerings, particularly those related to cross-border and international travel, may experience a depression for a significant length of time. In addition, Inspirato could not predict the impact that the COVID-19 pandemic has had and cannot predict the impact that the COVID-19 pandemic will continue to have on its business partners and third-party vendors and service providers. In addition, Inspirato may continue to be materially adversely impacted as a result of the material adverse impacts Inspirato’s business partners and third-party vendors suffered previously and may suffer now and in the future. To the extent the COVID-19 pandemic continues to materially adversely affect Inspirato’s business, results of operations, and financial condition, it may also have the effect of heightening many of the other risk factors described herein.

Inspirato has a history of net losses and may not be able to achieve or sustain profitability.

Inspirato incurred net losses of $11.3 million, $6.2 million, $0.5 million, and $13.6 million for the fiscal years ended December 31, 2018, 2019 and 2020 and the nine months ended September 30, 2021, respectively. As of December 31, 2020, and September 30, 2021, Inspirato had an accumulated deficit of $185 million and $196 million, respectively. Inspirato’s accumulated deficit and net losses historically resulted primarily from the substantial investments required to grow its business. Inspirato has invested significantly in efforts to grow its subscriptions, introduce new or expanded offerings, increase its marketing spend, expanded its operations and hire additional employees. In 2021, Inspirato started to incur significant costs related to the Business Combination and operating the Combined Company as a public company after the consummation of the Business Combination. Inspirato expects to continue making significant investments in its business in the future. These efforts may prove more expensive than currently anticipated, and Inspirato may not succeed in increasing its revenue sufficiently to offset these higher expenses. In particular, the impacts of the COVID-19 pandemic on Inspirato’s business have also contributed to the losses incurred during 2020 and Inspirato expects the ongoing economic impact from the COVID-19 pandemic to have a material adverse impact on its revenue and financial results for 2021 and in the future depending on the pandemic’s future impact.

If Inspirato fails to retain existing subscribers or add new subscribers, its business, results of operations, and financial condition would be materially adversely affected.

Inspirato has experienced significant subscriber growth over the past several years, particularly with respect to Inspirato Pass. Inspirato’s continued business and revenue growth is dependent on its ability to retain existing subscribers and add new subscribers, and Inspirato cannot be sure that it will be successful in these efforts, or that subscriber retention levels will not materially decline. There are a number of factors that could lead to a decline in subscribers or that could prevent Inspirato from increasing its subscribers, including:

 

   

Inspirato’s failure to deliver offerings that subscribers find attractive;

 

   

Inspirato’s ability to achieve and sustain market acceptance, particularly with respect to Inspirato Pass;

 

   

harm to Inspirato’s brand and reputation;

 

   

pricing and perceived value of Inspirato’s offerings;

 

   

subscribers engaging with competitive products and services;

 

   

problems affecting subscribers’ experiences;

 

   

a decline in the public’s interest in luxury travel;

 

   

deteriorating general economic conditions or a change in consumer discretionary spending preferences or trends;

 

56


Table of Contents
Index to Financial Statements
   

political, social or economic instability; and

 

   

events beyond Inspirato’s control such as the COVID-19 pandemic, other pandemics and health concerns, increased or continuing restrictions on travel, immigration, trade disputes, and the impact of climate change on travel, including fires, floods, severe weather and other natural disasters, and the impact of climate change on seasonal destinations.

In addition, if Inspirato’s platform is not easy to navigate; subscribers have an unsatisfactory sign-up, search, booking or payment experience on Inspirato’s platform; the content on Inspirato’s platform is not displayed effectively to subscribers; Inspirato is not effective in engaging subscribers across its various offerings and tiers; or Inspirato fails to provide an experience in a manner that meets rapidly changing demand, Inspirato could fail to acquire first-time subscribers and fail to retain with existing subscribers.

As a result of these factors, Inspirato cannot be sure that its subscriber levels will be adequate to maintain or permit the expansion of its operations. A decline in subscriber levels could have an adverse effect on Inspirato’s business, financial condition, and operating results.

Inspirato’s revenue growth rate has slowed, and it may not increase at the rates Inspirato anticipates in the future or at all.

Inspirato has experienced significant revenue growth in the past; however, its revenue growth has slowed in recent periods, and there is no assurance that historic growth rates will return. For the year ended December 31, 2020, as a result of the COVID-19 pandemic, Inspirato’s revenue decreased significantly compared to the year ended December 31, 2019. Inspirato’s future revenue growth depends on the growth of supply and demand for its offerings, and its business is affected by general economic and business conditions worldwide as well as trends in the global travel and hospitality industries. In addition, Inspirato believes that its revenue growth depends upon a number of factors, including:

 

   

the COVID-19 pandemic and its impact on the travel and accommodations industries;

 

   

Inspirato’s ability to retain and grow its number of subscribers;

 

   

Inspirato’s ability to retain and grow the number of luxury accommodations and experiences it offers;

 

   

events beyond Inspirato’s control such as pandemics and other health concerns, increased or continuing restrictions on travel and immigration, trade disputes, economic downturns, and the impact of climate change on travel, including fires, floods, severe weather and other natural disasters, and the impact of climate change on seasonal destinations;

 

   

competition;

 

   

the legal and regulatory landscape and changes in the application of existing laws and regulations or adoption of new laws and regulations that impact Inspirato’s business, and/or subscribers, including changes in tax, short-term occupancy, and other laws;

 

   

the attractiveness of Inspirato’s offerings to current and prospective subscribers, including the degree to which Inspirato correctly anticipates trends in consumer travel preferences;

 

   

the level of consumer awareness and perception of Inspirato’s brand;

 

   

the level of spending on sales and marketing to attract subscribers;

 

   

Inspirato’s ability to grow new offering tiers, such as Inspirato Pass, and to deepen its presence in certain geographies;

 

   

timing, effectiveness, and costs of expansion and upgrades to Inspirato’s platform and infrastructure; and

 

   

other risks described elsewhere in this proxy statement/prospectus.

 

57


Table of Contents
Index to Financial Statements

A softening of demand, whether caused by events outside of our control, such as COVID-19, changes in subscriber preferences, any of the other factors described above, or in this proxy statement/prospectus will result in decreased revenue. If Inspirato’s revenue does not improve, it may not achieve profitability and its business, results of operations, and financial condition would be materially adversely affected.

The hospitality market is highly competitive, and Inspirato may be unable to compete successfully with its current or future competitors.

The market to provide hospitality services is very competitive and highly fragmented. In addition, the barriers to entry are low and new competitors may enter. Inspirato’s current or potential competitors include global hotel brands, regional hotel chains, independent hotels, online travel agencies and home-sharing and rental services, and short term/vacation rental. Inspirato’s competitors may adopt aspects of its business model, which could reduce its ability to differentiate its offerings. Additionally, current or new competitors may introduce new business models or services that Inspirato may need to adopt or otherwise adapt to in order to compete, which could reduce Inspirato’s ability to differentiate its business or services from those of its competitors. Increased competition could result in a reduction in revenue, fewer attractive properties, higher lease rates, higher costs, or reduced market share.

Inspirato believes it competes primarily on the basis of the quality of its residences, the variety and attractiveness of its residences, the quality of its subscribers’ experience through its concierge and planning services and other subscriber service, and brand identity. Competitive factors in its industry are subject to change, such as the increased emphasis on cleaning and social distancing due to the COVID-19 pandemic. If subscribers choose to use other competitive offerings in lieu of Inspirato’s, Inspirato’s revenue could decrease, and it could be required to incur additional expenditures to compete more effectively. Any of these events or results could harm Inspirato’s business, operating results and financial condition.

In addition, some of Inspirato’s current or potential competitors, such as major hotel brands, are larger and have more resources than it does. Many of Inspirato’s current and potential competitors enjoy substantial competitive advantages, such as greater name recognition in their markets, well-established loyalty programs, longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources. Moreover, the hospitality services industry has experienced significant consolidation, and Inspirato expects this trend may continue as companies attempt to strengthen or hold their market positions in a highly competitive industry. Consolidation amongst Inspirato’s competitors will give them increased scale and may enhance their capacity, abilities, and resources, and lower their cost structures. In addition, Inspirato’s current or potential competitors may have access to larger developer, landlord or customer bases. As a result, its competitors may be able to respond more quickly and effectively than Inspirato can to new or changing opportunities, technologies, standards, or landlord or customer requirements. Furthermore, because of these advantages, existing and potential landlords and subscribers might accept Inspirato’s competitors’ offerings, even if Inspirato’s offerings are superior in other regards. For all of these reasons, Inspirato may not be able to compete successfully against its current and future competitors.

Inspirato may be unable to effectively manage its growth.

Inspirato has experienced rapid growth, and Inspirato continues to pursue rapid growth in existing and new markets throughout the world. The number of Inspirato’s Active Subscribers increased from approximately 1,500 as of December 31, 2012 to 13,191 as of September 30, 2021. After Inspirato’s reduction in force as a result of the COVID-19 pandemic in March 2020, Inspirato’s worldwide employee base grew from 470 employees as of September 30, 2020 to 708 as of September 30, 2021. Inspirato’s business is becoming increasingly complex due in part to the continued rapid evolution of the hospitality industry, the ongoing COVID-19 pandemic, Inspirato’s expansion into new markets, the increasing number of residences and hotels within its portfolio and changing local and national regulatory requirements. This increased complexity and rapid growth have demanded, and will continue to demand, substantial resources and attention from Inspirato’s management. Inspirato may need to

 

58


Table of Contents
Index to Financial Statements

increase headcount and hire additional specialized personnel in the future as it pursues its growth objectives. For example, Inspirato may need to hire, train and manage additional qualified data scientists, website and app developers, software engineers, financial operations and accounting personnel, and sales and marketing staff to properly manage its growth. When Inspirato enters or expands operations in a particular city, it may also need to hire a substantial number of staff to effectively manage the new operations, including staff to research local laws and regulations and monitor legal compliance. If Inspirato’s new hires are not available when needed or perform poorly, or if Inspirato is unsuccessful in hiring, training, managing and integrating new employees or if it is unsuccessful in retaining existing employees, Inspirato may not be able to meet its business and growth objectives.

Inspirato’s subscriber support function is critical to the success of Inspirato’s business, and any failure to provide high-quality service could affect its reputation and ability to retain its existing subscribers and attract new subscribers.

Inspirato’s ability to provide high-quality support to its subscribers is important for the growth of its business and any failure to maintain such standards of subscriber support, or any perception that Inspirato does not provide high-quality service, could affect Inspirato’s ability to retain and attract subscribers. Meeting the support expectations of Inspirato’s subscribers requires significant time and resources from Inspirato’s support team and significant investment in staffing and technology. In particular, many travel reservations made through Inspirato include planning assistance, daily housekeeping, related property services and a local concierge to assist subscribers during their travel. If Inspirato or its third-party services providers fail to provide these services in a high-quality manner, or these services are not commensurate with those offered by other luxury travel providers such as hotel brands, its brand would be harmed. In addition, as Inspirato expands the destinations offered to its subscribers, particularly outside of North America and Europe, Inspirato needs to be able to provide effective support that meets subscribers’ expectations in a variety of countries and languages.

Inspirato’s local support is performed by a combination of its internal teams and third-party service providers. Inspirato relies on its internal teams and these third parties to provide timely, responsive and high-quality service to its subscribers. Reliance on these third parties requires that Inspirato provide proper guidance and training for their employees, maintain proper controls and procedures for interacting with Inspirato’s subscribers, and ensure acceptable levels of quality and subscriber satisfaction are achieved.

Inspirato relies on information provided by subscribers and is at times limited in its ability to provide adequate support or help subscribers resolve issues due to its lack of information or control of local third-party staff. To the extent that subscribers are not satisfied with the timeliness, responsiveness or quality of Inspirato’s support, Inspirato may not be able to retain subscribers, and its reputation and brand, as well as its business, results of operations, and financial condition, could be materially adversely affected.

Providing support that is timely, responsive and high-quality is costly, and Inspirato expects such cost to continue to rise in the future as it grows its business.

Inspirato may not be able to obtain sufficient new and recurring supply of luxury accommodations and experiences or to renew its existing supply of luxury accommodations and experiences.

Inspirato continually pursues entering into additional leases, adding residences to existing leases, and renewing and extending current leases as well as other occupancy arrangements with property owners, resorts, hotels and developers. If Inspirato fails to secure or renew leases or other occupancy arrangements for attractive luxury properties, resorts, and hotels, it will not be able to expand its portfolio of locations and may not achieve its growth and financial forecasts.

Inspirato may not be able to add sufficient properties that meet its brand standards at an acceptable cost to meet its strategic goals and financial forecasts. Due to the number of properties that Inspirato has already secured

 

59


Table of Contents
Index to Financial Statements

under leases or other occupancy arrangements in many locations and its emphasis on providing a luxury travel experience, it may find it more difficult to find additional attractive properties in those markets. In certain international markets, Inspirato has less experience and fewer real estate staff, and local regulations and real estate industry practices (including customary lease provisions and governing law) may make it more difficult to identify properties that are consistent with Inspirato’s brand and standards. Even where Inspirato identifies suitable properties, Inspirato may not be able to negotiate leases or other occupancy arrangements on commercially reasonable terms or at all or may incur additional expenses engaging local counsel to assist with lease or other occupancy arrangement negotiations. Inspirato’s leases and other occupancy arrangements are often complex and require substantial time to negotiate, which makes forecasting Inspirato’s revenue from new properties more difficult.

Even where Inspirato succeeds in signing a lease for a new property, the landlord or developer may be unable or unwilling to deliver the property at the time provided for, or Inspirato may encounter other unforeseen delays, such as constructions delays in the case of new developments or in preparing the property for initial subscriber stays. Many newly leased properties become available for Inspirato subscriber stays only after a considerable period of time, which increases the risk of unforeseen delays in recognizing revenue from such properties. In addition, the success of any new property will depend on Inspirato’s ability to integrate it into existing operations and successfully market it to Inspirato’s subscribers. Newly leased properties could be more difficult or expensive to onboard, have undisclosed conditions that result in unanticipated expenses or claims against Inspirato for which it may have little or no effective recourse against the landlord, or otherwise may not provide their anticipated benefits.

In addition to providing luxury accommodations, Inspirato’s business also depends on its ability to provide high-quality, personalized service including travel planning, on-site concierges, daily housekeeping and unique travel experiences. If Inspirato is not successful in providing high-quality, luxury experiences to its subscribers, the perceived benefits of subscriptions may decrease and its business, financial condition and operating results may be adversely impacted.

Inspirato has limited experience with its pricing models, particularly for Inspirato Pass, and may not accurately predict the long-term rate of subscriber adoption or renewal or the impact these will have on its revenue or results of operations.

Inspirato generates revenue primarily from travel bookings and subscriptions to its Inspirato Club and Inspirato Pass offerings. Inspirato’s subscriptions provide varying degrees of travel booking rights, and additional bookings and travel-related services are available on an ad-hoc basis. Inspirato has limited experience with respect to determining the optimal prices and pricing models for its subscription plans and other travel-related services, particularly with respect to Inspirato’s newer offerings such as Inspirato Pass, which launched in 2019 and experienced significant disruption in 2020 due to the COVID-19 pandemic. As the markets for Inspirato’s offerings mature, as it creates new offerings, or as new competitors introduce competing offerings, Inspirato may be unable to attract new subscribers or retain existing subscribers at the same price or based on the same pricing model as it has used historically.

Inspirato also has limited experience in determining complementary offerings to provide in conjunction with its subscription plans and which to offer as add-on offerings. Inspirato’s limited experience in determining the optimal manner in which to bundle its various offerings could reduce its ability to capture the value delivered by its offerings, which could adversely impact its business, results of operations, and financial condition.

Inspirato depends on its key personnel and other highly skilled personnel, and if Inspirato fails to attract, retain, motivate or integrate its personnel, its business, financial condition and results of operations could be adversely affected.

Inspirato’s success depends to a significant degree on the retention of its founders, senior management team, key technical, financial and operations employees and other highly skilled personnel. Inspirato’s success also

 

60


Table of Contents
Index to Financial Statements

depends on its ability to identify, hire, develop, motivate, retain and integrate highly qualified personnel for all areas of its organization. Inspirato may not be successful in attracting and retaining qualified personnel to fulfill its current or future needs, and future governmental or regulatory orders related to COVID-19, which remain uncertain and cannot be predicted, may also impact Inspirato’s employee retention. Members of Inspirato’s management team or other key employees may terminate their employment with Inspirato at any time, and it may be difficult to find suitable replacements on a timely basis, on competitive terms or at all. If Inspirato is unable to attract and retain the necessary personnel, particularly in critical areas of its business, it may not achieve its strategic goals.

Inspirato faces intense competition for highly skilled personnel, especially in Denver, Colorado, where it maintains its headquarters. To attract and retain qualified personnel, Inspirato has had to offer, and it believes it will need to continue to offer, competitive compensation and benefits packages. Job candidates and existing personnel often consider the value of the equity awards they receive in connection with their employment. If the perceived value of Inspirato’s equity awards declines, it may adversely affect its ability to attract and retain highly qualified personnel. Inspirato may need to invest significant amounts of cash and equity to attract and retain new employees and expend significant time and resources to identify, recruit, train and integrate such employees, and it may never realize returns on these investments. If Inspirato is unable to effectively manage its hiring needs or successfully integrate new hires, its efficiency, ability to meet forecasts and employee morale, productivity and retention could suffer, which could adversely affect its business, financial condition and results of operations.

Inspirato’s business depends on its reputation and the strength of its brand, and any deterioration could adversely impact its business, financial condition, or results of operations.

Inspirato’s business depends on its reputation and the strength of its brand as a provider of luxury accommodations and experiences. Inspirato believes that the strength of its brand is particularly important to its ability to attract and retain subscribers and to compete for attractive new properties. Many factors can affect Inspirato’s reputation and the value of its brand, including its level of service, safety of its subscribers, its approach to health and cleanliness, publicized incidents in or around its properties, ability to protect and use its brand and trademarks, levels of marketing, and the prevalence of other luxury accommodations and experiences in the destinations it serves. In addition, Inspirato’s brand and reputation could be harmed if it fails to act responsibly or is perceived as not acting responsibly, or fails to comply with regulatory requirements as interpreted by certain governments or agencies thereof in a number of other areas, such as safety and security, data security, privacy practices, provision of information about users and activities on its platform, sustainability, human rights, diversity, non-discrimination, and support for employees and local communities.

Reputational value is also based on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of Inspirato, its brand and its properties and experiences. It may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate. Social media compounds the potential scope of the negative publicity that could be generated and the speed with which such negative publicity may spread. Inspirato’s efforts to preserve and enhance consumer awareness of its brands may not be successful, and even if Inspirato is successful in its branding efforts, such efforts may not be cost-effective or as efficient as they have been historically, resulting in increased customer acquisition costs.

Inspirato’s brand and reputation may suffer as a result of any failure to provide service to its subscribers that is commensurate with their expectations. Subscriber complaints or negative publicity about Inspirato’s company, properties, experiences or services could diminish subscribers’ confidence in Inspirato or its brand and impair its relationships with landlords, regulators and other governmental authorities, third-party partners, and others that are important or impactful to its business. Effective subscriber service requires significant personnel and technology expense, and this expense, if not managed properly, could significantly impact Inspirato’s profitability. Failure to manage or train subscriber service representatives properly could compromise Inspirato’s

 

61


Table of Contents
Index to Financial Statements

ability to provide travel and experiences that are acceptable to Inspirato’s subscribers. Inspirato also relies on third-party companies to provide some subscriber services, including trip planning assistance, concierge services, daily housekeeping and related property services. Inspirato does not directly control these companies or their personnel. Negative publicity related to any of Inspirato’s third-party partners, including publicity related to quality standards or safety concerns, could adversely affect Inspirato’s reputation and brand, and could potentially lead to increased regulatory or litigation exposure. Inspirato may also be the subject of blog, social media or forum postings that include inaccurate or negative statements about its properties or services or its business in general that create negative publicity. Any deterioration of Inspirato’s brand could adversely impact its business, financial condition, or results of operations.

As a result of recognizing revenue in accordance with GAAP, Inspirato’s financial statements may not immediately reflect changes in customer bookings, cancellations and other operating activities.

Inspirato experiences a difference in timing between when a booking is made for travel and when it recognizes revenue, which occurs upon check-in. The effect of significant downturns in bookings in a particular quarter may not be fully reflected in Inspirato’s results of operations until future periods because of this timing in revenue recognition. Inspirato’s booking metrics are also not necessarily reflective of revenue in a specific time period as a result of potential cancellations between booking and check-in. For example, the COVID-19 pandemic resulted in cancellations of bookings and those bookings were not recognized as revenue until the trips were taken.

The failure to successfully execute and integrate acquisitions could materially adversely affect Inspirato’s business, results of operations, and financial condition.

One element of Inspirato’s growth strategy is to acquire businesses. Inspirato may expend significant cash or incur substantial debt to finance such acquisitions, which indebtedness could result in restrictions on Inspirato’s business and significant use of available cash to make payments of interest and principal. In addition, the Combined Company may finance acquisitions by issuing equity or convertible debt securities, which could result in further dilution to the Combined Company’s stockholders. Inspirato may enter into negotiations for acquisitions that are not ultimately consummated. Those negotiations could result in diversion of management time and significant out-of-pocket costs. If Inspirato fails to evaluate and execute acquisitions successfully, Inspirato’s business, results of operations, and financial condition could be materially adversely affected.

In addition, Inspirato may not be successful in integrating acquisitions or the businesses Inspirato acquires may not perform as well as Inspirato expects. Any future failure to manage and successfully integrate acquired businesses could materially adversely affect Inspirato’s business, results of operations, and financial condition. Acquisitions involve numerous risks, including the following:

 

   

difficulties in integrating and managing the combined operations, technology platforms, or offerings of the acquired companies and realizing the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays, and failure to execute on the intended strategy and synergies;

 

   

failure of the acquired businesses to achieve anticipated revenue, earnings, or cash flow;

 

   

diversion of management’s attention or other resources from Inspirato’s existing business;

 

   

Inspirato’s inability to maintain the business relationships of acquired businesses;

 

   

uncertainty of entry into businesses or geographies in which Inspirato has limited or no prior experience or in which competitors have stronger positions;

 

   

unanticipated costs associated with pursuing acquisitions or greater than expected costs in integrating the acquired businesses;

 

62


Table of Contents
Index to Financial Statements
   

responsibility for the liabilities of acquired businesses, including those that were not disclosed to Inspirato or exceed Inspirato’s estimates, such as liabilities arising out of the failure to maintain effective data protection and privacy controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including short-term occupancy and tax laws;

 

   

difficulties in or costs associated with assigning or transferring to Inspirato the acquired companies’ intellectual property or its licenses to third-party intellectual property;

 

   

inability to maintain Inspirato’s culture and values, ethical standards, controls, procedures, and policies;

 

   

challenges in integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies;

 

   

challenges in integrating and auditing the financial statements of acquired companies that have not historically prepared financial statements in accordance with GAAP; and

 

   

potential accounting charges to the extent goodwill and intangible assets recorded in connection with an acquisition, such as trademarks, business relationships, or intellectual property, are later determined to be impaired and written down in value.

Inspirato relies on consumer discretionary spending and any decline or disruption in the travel and hospitality industries or economic downturn would materially adversely affect its business, results of operations, and financial condition.

Inspirato’s business is particularly sensitive to trends in the travel, real estate and vacation rental markets, and trends in the general economy, which are all unpredictable. Travel, including accommodation, is significantly dependent on discretionary spending levels. As a result, sales of travel services tend to decline during general economic downturns, recessions and times of political or economic uncertainty as consumers engage in less discretionary spending, are concerned about unemployment or inflation, have reduced access to credit or experience other concerns or effects that reduce their ability or willingness to travel. Leisure travel in particular, which accounts for substantially all of Inspirato’s current business, is dependent on discretionary consumer spending levels. Downturns in worldwide or regional economic conditions, such as the current downturn resulting from the COVID-19 pandemic, have led to some decrease in leisure travel and travel spending, and similar downturns in the future may materially adversely impact demand for Inspirato’s offerings. Such a shift in consumer behavior could materially adversely affect Inspirato’s business, results of operations, and financial condition. Inspirato’s operating results, to the extent they reflect changes in the broader travel, real estate and vacation rental industries, may be subject to significant fluctuations.

The subscription travel market and the market for Inspirato’s subscription offerings is still relatively new, and if it does not continue to grow, grows more slowly than expected or fails to grow as large as expected, Inspirato’s business, financial condition and results of operations could be adversely affected.

Inspirato offers a distinctive type of luxury travel service for which the market is still relatively new, and it is uncertain to what extent market acceptance will continue to grow, if at all. Inspirato’s success will depend on the willingness of potential subscribers and the market at large to adopt its particular model of luxury travel, which differs from both traditional hotels and home-sharing or rental marketplaces. In many geographies, including geographies that Inspirato hopes to enter in the future, the market for its subscription-based luxury travel is unproven, with little data or research available regarding the market and industry. If potential subscribers do not perceive Inspirato’s accommodations or experiences as compelling, or choose different accommodations due to concerns regarding safety, the availability of on-site staffing, amenities or services associated with traditional hotels, affordability or other reasons, then the market for Inspirato’s luxury travel may not further develop, may develop more slowly than expected or may not achieve its expected growth potential. Such outcomes could adversely affect Inspirato’s business, financial condition and results of operations. Additionally,

 

63


Table of Contents
Index to Financial Statements

Inspirato’s ability to develop the market in which it operates will depend to a substantial extent on the willingness of landlords and property developers to enter into leases, property development or other occupancy arrangements with Inspirato, and Inspirato’s ability to operate in markets without clear or well-established regulations covering properties used in Inspirato’s business. Regulation of short-term occupancy is an evolving field, and in numerous localities, local regulations have been adopted in recent years that seek to discourage short-term occupancy. Moreover, homeowners’ associations and other associations in communities where Inspirato’s properties are located may seek to restrict limit the ability of landlords to enter into lease agreements with companies such as Inspirato. Additionally, the majority of Inspirato’s revenue is driven by Inspirato’s subscription offerings, and the adoption of subscription models in the travel industry is relatively new. For example, Inspirato Pass was first launched in 2019. If customers do not shift to subscription travel models and subscription travel services do not achieve widespread adoption, or if there is a reduction in demand for subscription travel services, our business, financial condition, and results of operations could be adversely affected. For these and other reasons, Inspirato may be unable to accurately predict the demand for and the supply of potential units in certain markets, which could cause it to spend more in a certain market than is justified by the resulting revenues, or to miss its financial targets, and could otherwise harm its business.

If Inspirato is unable to manage the risks presented by its international business model, its business, results of operations, and financial condition would be materially adversely affected.

Inspirato has leased properties, works with hotel and resort partners, and offers Inspirato Only Experiences around the world and continues to expand its operations. Currently, Inspirato features destinations in the U.S., Canada, Europe, Central and South America, the Caribbean and Oceania, and plans to continue its efforts to expand internationally, including in jurisdictions where it does not currently operate to a significant degree, such as many countries in Europe, Asia, South America and Oceania. Operating in international markets also requires significant management attention and financial resources. Due to the COVID-19 pandemic, international travel restrictions and other regulations related to the pandemic are regularly and rapidly changing, causing disruptions to travel plans. For example, one of the 2021 African Safari and Winelands Inspirato Only Experiences was postponed, likely to be rescheduled for 2022 or 2023, following South Africa implementing level 4 lockdown regulations, as a result of the COVID-19 pandemic.

Expansion into new international emerging markets may have risks due to factors specific to those markets. Emerging markets are countries which have less developed economies and may be vulnerable to economic and political instability, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of taxes or other charges by governments. The occurrence of any of these events in markets where Inspirato operates and the resulting instability may adversely affect Inspirato’s business.

Inspirato has expanded and expects to continue to expand our service to countries in the Caribbean and Latin America, some of which have less developed legal systems, financial markets, and business and political environments than the U.S., and therefore present greater political, legal, regulatory, economic and operational risks. Inspirato has emphasized legal compliance and has implemented and continues to implement and refresh policies, procedures and certain ongoing training of employees with regard to business ethics and compliance, anti-corruption policies and many key legal requirements; however, there can be no assurance Inspirato’s employees or third party service providers in such locations will adhere to its code of business conduct, anti-corruption policies, other Company policies, or other legal requirements. If Inspirato fails to enforce its policies and procedures properly or maintain adequate record-keeping and internal accounting practices to accurately record its transactions, it may be subject to sanctions. In the event Inspirato believes or has reason to believe its employees have or may have violated applicable laws or regulations, it may be subject to investigation costs, potential penalties and other related costs which in turn could negatively affect its reputation, and its results of operations and cash flow.

Managing a multinational organization is difficult, time consuming and expensive, and any international expansion efforts that Inspirato undertakes may not be profitable in the near or long term or otherwise be

 

64


Table of Contents
Index to Financial Statements

successful. Inspirato has limited operating experience in many foreign jurisdictions and is making significant investments to build its international operations. Conducting international operations subjects Inspirato to risks that it generally does not face in the U.S. These risks include:

 

 

costs, resources and uncertainties associated with tailoring its services in international jurisdictions as needed to better address the needs of subscribers;

 

 

costs and risks associated with local and national laws and regulations governing zoning, hotels and other accommodations, accessibility, property development and rental, health and safety, climate change and sustainability, and employment;

 

 

differences in local real estate and hotel industry practices, including leasing and hotel transaction terms, that may make it difficult for Inspirato to add properties on satisfactory terms or that may require higher than expected upfront payments or other costs;

 

 

operational and compliance challenges caused by distance, language, and cultural differences;

 

 

costs and risks associated with compliance with international tax laws and regulations;

 

 

costs and risks associated with compliance with the U.S. Foreign Corrupt Practices Act and other laws in the U.S. related to conducting business outside the U.S., as well as the laws and regulations of non-U.S. jurisdictions governing bribery and other corrupt business activities;

 

 

being subject to other laws and regulations, including laws governing online advertising and other Internet activities, email and other messaging, collection, use, and other processing of personal data and other content, ownership of intellectual property, taxation and other activities important to Inspirato’s online business practices;

 

 

competition with companies that understand the local market better than Inspirato does or who have pre-existing relationships with landlords, property developers, regulators and travelers in those markets; and

 

 

reduced or varied protection for intellectual property rights in some countries.

Inspirato cannot guarantee that its international expansion efforts in any or multiple territories will be successful. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability and could instead result in increased costs.

Inspirato has experienced and may continue to experience significant fluctuations in its results of operations, which make it difficult to forecast its future results.

Inspirato’s results of operations have historically varied from period-to-period and it expects that its results of operations will continue to fluctuate for a variety of reasons, many of which are outside of its control and difficult to predict. Inspirato experiences seasonal fluctuations in its financial results. Because its results of operations may vary significantly from quarter-to-quarter and year-to-year, the results of any one period should not be relied upon as an indication of future performance. Inspirato’s revenue, expenses, operating results and cash flows, as well as its key operating metrics, have fluctuated from quarter-to-quarter in the past and are likely to continue to do so in the future. These fluctuations are due to, or may result from, many factors, including:

 

 

the quantity of its accommodations;

 

 

the timing and success of changes in amenities and services;

 

 

the impact of the COVID-19 pandemic or other public health crises on demand for its accommodations, and on its operating expenses and capital requirements;

 

 

the introduction and performance of new properties, experiences, amenities, technologies and services, including how quickly new properties are ready for booking by subscribers and the degree to which Inspirato correctly anticipates trends in consumer travel preferences;

 

65


Table of Contents
Index to Financial Statements
 

the timing, cost and success of advertising and marketing initiatives;

 

 

the amount and timing of financing activities, operating expenses and capital expenditures;

 

 

changes in prevailing lease rates for attractive properties, and any adjustments in rental ratesunder existing leases;

 

 

changes in cash flow due to lease renewals and amendments and new lease acquisitions and property onboardings;

 

 

changes in cash flow due to the seasonal nature of vacation travel and the unpredictability of subscriber cancellations;

 

 

economic instability in major markets, and fluctuations in exchange rates;

 

 

the introduction of new properties, amenities or services by its competitors;

 

 

declines or disruptions in the hospitality industry, particularly in cities or regions where Inspirato has significant operations;

 

 

changes in the timing of holidays or other vacation events;

 

 

unanticipated disruptions or costs due to regulatory issues, including changes in hospitality laws, hotel regulations, or zoning or accessibility laws;

 

 

litigation and settlement costs, including unforeseen attorneys’ fees and costs;

 

 

new accounting pronouncements and changes in accounting standards or practices, particularly any affecting the recognition of revenue as well as accounting for leases;

 

 

new laws or regulations, or new interpretations of existing laws or regulations, that harm its business or restrict the hospitality industry, travel, the Internet, e-commerce, online payments or online communications; and

 

 

other risks described elsewhere in this proxy statement/prospectus.

Fluctuations in operating results may, particularly if unforeseen, cause Inspirato to miss projections it may have provided to the public. In addition, a significant portion of Inspirato’s expenses and investments are fixed and such fluctuations in operating results may cause Inspirato to face short-term liquidity issues, impact its ability to retain or attract key personnel or expand its portfolio of properties, or cause other unanticipated issues.

The hospitality industry is subject to seasonal and cyclical volatility, which may contribute to fluctuations in Inspirato’s results of operations and financial condition.

The hospitality industry is seasonal in nature. The periods during which Inspirato’s properties experience higher occupancy vary from property to property, depending principally upon their location, type of property and competitive mix within the specific location, and may change with changes in overall availability of lodging and hospitality options within a local market. Based on historical results, Inspirato generally expects its revenues to be lower in the second quarter of each year than in each of the three other quarters. In addition, the hospitality industry is cyclical and demand generally follows the general economy on a lagged basis. The hospitality industry as a whole experienced a downturn driven by the COVID-19 pandemic. Inspirato expects to enter into a recovery phase as vaccines and treatments become more widely available and travel restrictions abate. However, this recovery may not occur when or to the degree expected. The seasonality and cyclicality of Inspirato’s industry may contribute to fluctuations in its results of operations and financial condition.

Inspirato’s leases may be subject to premature termination, which can be disruptive and costly.

Inspirato’s leases or management contracts may be subject to premature termination in certain circumstances, such as the bankruptcy of a developer or landlord, noncompliance with underlying covenants

 

66


Table of Contents
Index to Financial Statements

governing the property, or, under some agreements, failure to meet specified financial or performance criteria, which Inspirato may fail or elect not to waive or cure, or, in certain leases, termination for convenience by a landlord by providing Inspirato prior notice (typically one year). Some of Inspirato’s leased properties have been pledged as collateral for mortgage loans entered into by the owners of the properties when those properties were purchased or refinanced. If those owners cannot repay or refinance maturing indebtedness on favorable terms or at all, such owners may declare bankruptcy and/or lenders could declare a default, accelerate the related debt, and foreclose on the subject property. Such foreclosures or bankruptcies could in some cases result in the termination of Inspirato’s leases and eliminate its anticipated income and cash flows, which could have a significant negative effect on its results of operations. Landlords or other business partners may also assert the right to terminate leases or other significant contracts even where the agreements do not provide such a right. If terminations occur for these or other reasons, Inspirato may need to enforce its right to damages for breach of contract and related claims, which may cause it to incur significant legal fees and expenses. Any damages Inspirato ultimately collects could be less than the projected future value of the revenues and income it would have otherwise generated from the property. For example, if a landlord breaches a lease agreement by terminating without cause, Inspirato may choose not to or it may be financially impractical to enforce lease provisions requiring such landlord to pay an administrative fee plus the cost of relocating reservations, and Inspirato may choose to settle for a lower amount. Premature terminations of significant agreements could hurt Inspirato’s financial performance or its ability to grow its business.

In addition, Inspirato’s ability to negotiate favorable terms to extend an expiring lease or to secure an alternate location will depend on then-prevailing conditions in the real estate market, such as overall rental cost increases, competition from other would-be tenants for desirable leased spaces, Inspirato’s relationships with current and prospective building owners and landlords, and other potential factors that are not within Inspirato’s control. If Inspirato is not able to renew or replace an expiring lease, it will incur significant costs related to vacating that space and developing alternative space, if any.

The relatively long-term and fixed-cost nature of Inspirato’s leases may limit its operating flexibility and could adversely affect its liquidity and results of operations.

Inspirato currently leases most of its properties. Inspirato’s obligations to landlords under these agreements extend for periods that frequently significantly exceed the duration of customers’ subscriptions, often by several years.

Inspirato’s leases generally provide for fixed monthly payments that are not tied to occupancy rates or revenues, and its leases typically contain minimum rental payment obligations. As a result, if Inspirato is unable to maintain sufficient occupancy rates, its lease expenses may not be sufficiently offset by its revenue from subscribers. In addition, Inspirato may not be able to lower its fixed monthly payments under its leases in an amount sufficient to offset any revenue lost as a result of future prices that Inspirato charges its subscribers, which may also reduce its margins and cash flow. In any such event, Inspirato would not have the ability to reduce its rent under the lease or otherwise terminate the lease in accordance with its terms.

Inspirato has limited flexibility to rapidly alter its portfolio of properties and its lease commitments in response to changing circumstances. Leases require substantial time to negotiate, and there is often a significant delay between a lease signing and the availability of a property to Inspirato’s subscribers. In addition, Inspirato’s leases generally require the landlord’s consent to assign the lease or sublease the property, which may not be granted or may be granted only on unfavorable terms. Even if Inspirato is able to assign or sublease an unprofitable property, it may incur significant costs, including transaction costs associated with finding and negotiating with potential transferees, upfront payments or other inducements, costs to restore the property to its previous condition, and other costs to exit the property.

Moreover, Inspirato’s leases contain a variety of contractual rights and obligations that may be subject to interpretation. Inspirato’s interpretations of its leases are sometimes disputed by landlords, which result in

 

67


Table of Contents
Index to Financial Statements

expensive and disruptive litigation in some instances. For example, certain landlords have asserted breach of contract for failure to maintain a property in “substantially the same condition” and in 2020, certain landlords disputed “force majeure” clauses in relation to the COVID-19 pandemic. Similar disputes may occur in the future. Inspirato’s failure to satisfy its contractual obligations in these leases could result in defaults under the leases. Any default, claim or dispute regarding Inspirato’s leases or its other occupancy arrangements could result in litigation, damage to Inspirato’s reputation, disruption of operations and Inspirato’s subscribers’ experiences at the affected property, a requirement that Inspirato exit the property earlier than planned, and damages or other legal remedies against Inspirato, any of which could have a material and adverse effect on Inspirato’s business, results of operations and financial condition.

If Inspirato is unable to adapt to changes in technology, Inspirato’s business could be harmed.

Because the Inspirato website, custom applications supporting the Inspirato website, the Inspirato app and the algorithms Inspirato uses to generate trip lists are critical to its business, and subscribers increasingly demand technology-driven features and amenities when they seek accommodations, Inspirato will need to continuously modify and enhance its services and business systems to keep pace with technological changes. Inspirato may not be successful in developing or obtaining from third parties necessary, functional and popular modifications and enhancements. Furthermore, uncertainties about the timing and nature of these necessary changes could result in unplanned research and development expenses. In addition, if Inspirato’s properties, website or app, or internal systems fail to operate effectively with future technologies, Inspirato may experience subscriber dissatisfaction, lost revenue, difficulties in providing subscriber service or adding new properties to its portfolio, or other disruptions in its operations may result, any of which could harm its business.

Inspirato may become involved in claims, lawsuits, and other proceedings that could adversely affect its business, financial condition, and results of operations.

Inspirato is involved in various legal proceedings relating to matters incidental to the ordinary course of its business and may be subject to additional legal proceedings from time to time. Legal proceedings can be time-consuming, divert management’s attention and resources, and cause Inspirato to incur significant expenses or liability. The expense of litigation and the timing of this expense from period to period are difficult to estimate and subject to change and could adversely affect Inspirato’s financial condition and results of operations. In particular, the international nature of Inspirato’s operations and the number of countries in which it operates could subject it to increased risk of litigation in foreign jurisdictions, which may be lengthier, costlier or less predictable than comparable litigation in the U.S. Because of the potential risks, expenses and uncertainties of litigation, Inspirato may, from time to time, settle disputes even where it has meritorious claims or defenses. Any of the foregoing could adversely affect Inspirato’s business, financial condition, and results of operations.

Inspirato’s properties are relatively concentrated in a limited number of travel destinations.

Inspirato’s operations are relatively concentrated in a limited number of travel destinations. Inspirato’s accommodations and experiences are located in popular vacation destinations, some of which are more heavily utilized on a seasonal basis. As a result, its ability to realize a benefit from its properties in these regions is heavily dependent upon its ability to maintain occupancy during key seasonal periods. In addition, factors influencing the desirability of its properties in a particular city or region or during a specific season could adversely affect Inspirato’s ability to attract new subscribers and retain existing subscribers. Moreover, to the extent that consumer travel preferences change, Inspirato may not correctly anticipate these changes in a timely manner, or at all, which could adversely impact its ability to maintain occupancy in its properties.

Geographic concentration magnifies the risk to Inspirato of localized economic, political, public health and other conditions. Inspirato expects that its operations will continue to be concentrated in a limited number of travel destinations. Civil unrest, public health crises, unusual weather, natural disasters or other factors affecting travel to these destinations or other markets in which Inspirato is expanding, as well as changes in local

 

68


Table of Contents
Index to Financial Statements

competitive conditions, may have a disproportionate effect on its revenue and on its ability to secure sufficient staffing, supplies or services for its largest markets. In addition, Inspirato’s property leasing and onboarding process can take substantial time, which may make it more difficult to compete for subscribers in a newly popular travel destination.

Inspirato faces possible risks associated with natural disasters and the physical effects of climate change, which may include more frequent or severe storms, hurricanes, flooding, rising sea levels, shortages of water, droughts and wildfires, any of which could have a material adverse effect on our business, results of operations, and financial condition.

Inspirato is subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent or severe storms, hurricanes, flooding, rising sea levels, shortages of water, droughts, and wildfires, any of which could have a material adverse effect on Inspirato’s business, results of operations, and financial condition. To the extent climate change causes changes in weather patterns, Inspirato’s coastal destinations could experience increases in storm intensity and rising sea-levels causing damage to Inspirato’s properties and result in a reduced number of properties in these areas. Climate change may also affect Inspirato’s business by increasing the cost of, or making unavailable, property insurance on terms Inspirato or its landlords find acceptable in areas most vulnerable to such events, increasing operating costs, including the cost of water or energy, and requiring Inspirato or its landlords to expend funds as they seek to repair and protect their properties in connection with such events. As a result of the foregoing and other climate-related issues, Inspirato may be unable to provide properties in certain areas due to climate change, and it may lose both landlords and guests, which could have a material adverse effect on our business, results of operations, and financial condition.

Inspirato requires additional capital to support business growth, and this capital might not be available in a timely manner or on favorable terms.

Inspirato intends to continue to make investments to support its business growth and may require additional funds to respond to business challenges, including the need to develop or acquire new properties or experiences or enhance its existing properties or experiences, enhance its operating infrastructure or acquire complementary businesses and technologies. Accordingly, the Combined Company may need to engage in equity or debt financings to secure additional funds. If additional funds are raised through further issuances of equity or convertible debt securities, existing stockholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those of holders of Combined Company Common Stock. Any debt financing could involve restrictive covenants relating to financial and operational matters, which may make it more difficult for Inspirato to obtain additional capital and to pursue business opportunities, including potential acquisitions or strategic partnerships. In addition, Inspirato may not be able to obtain additional financing on favorable terms, if at all. If Inspirato is unable to obtain adequate or satisfactory financing when it requires it, its ability to continue to support its business growth and to respond to business challenges could be significantly limited.

Inspirato is subject to risks associated with the employment of hospitality personnel and the use of third-party subscriber services contractors.

Inspirato’s hospitality employees and other subscriber services personnel are critical to its ability to add properties, maintain its properties, strengthen its reputation for subscriber service, and attract and retain subscribers. If its relationship with employees in any city or key property, or within its central subscriber services function, deteriorates for any reason, its reputation, subscriber relationships and revenue may suffer, and it may incur costs to replace and retrain additional personnel or third-party contractors. In addition, many of Inspirato’s subscriber services representatives and housekeepers who provide services to Inspirato and its subscribers are employed by third-party agencies, that it does not control. Inspirato’s business and reputation could be harmed in the event of any dispute with these agencies, whether by their staff or with Inspirato, or if their staff fail to provide services that meet Inspirato’s or its subscribers’ standards and expectations. In addition, labor costs are a

 

69


Table of Contents
Index to Financial Statements

significant component of Inspirato’s operating expenses, and any increase in the cost of wages, benefits or other employee-related costs could cause its results of operations and cash flow to be lower than anticipated. Inspirato’s costs associated with any future governmental or regulatory orders related to COVID-19, which remain uncertain and unpredictable, may also impact worker retention and increase costs associated with any re-training of newly hired or newly engaged workers.

Inspirato may also incur increased legal costs and indirect labor costs because of disputes involving its workforce. The resolution of labor disputes or labor contracts could lead to increased labor costs, either by increases in wages or benefits or by changes in work rules that raise operating costs. Labor disputes and disruptions may also occur within landlords’ workforces at buildings Inspirato occupies, which could harm its subscribers’ experience and reduce bookings at the affected property.

Inspirato incurs costs relating to the preparation, maintenance, refurbishment and remediation of its luxury properties, which are typically high compared to other travel companies and may be higher than anticipated.

Inspirato typically incurs expenses to prepare a newly-leased property for its initial subscribers and to keep its leased properties in an attractive condition. Although Inspirato attempts to have the landlord or developer bear some of the capital repair costs, it is often responsible for all or a significant portion of routine property care and maintenance. Even where landlords and developers are contractually responsible for some costs, they may dispute or fail to comply with their obligations. In addition, the terms of Inspirato’s leases generally require that it ensure that the spaces it occupies are kept in good repair throughout the term of the lease. Inspirato’s leases may also require that it return the space to the landlord at the end of the lease term in essentially the same condition it was delivered to Inspirato, which may require removing all fixtures and improvements to the space, and often requires repainting and other repair work. The costs associated with Inspirato’s onboarding, maintenance, removal and repair work are often significant and may vary from its forecasts.

Because of Inspirato’s focus on providing unique, luxury accommodations, it may incur significantly greater expenses, with greater frequency, to maintain its accommodations in a condition that is satisfactory to Inspirato’s subscribers as compared to other companies in the travel industry. For example, Inspirato may expend significantly more on premium fixtures than other travel companies and may be unable to realize economies of scale available to larger hotel companies that utilize standard furniture across rooms in their properties. Accordingly, the costs incurred by Inspirato for refurbishing its properties may be less predictable than other travel companies. Any failure to provide luxury accommodations that are acceptable to its subscribers would harm Inspirato’s brand and reputation. If Inspirato does not effectively anticipate subscriber preferences and tastes, it may incur additional costs related to further refurbishment or may experience under-utilization of a given property, either of which could harm its business, financial condition and results of operations.

Inspirato is exposed to fluctuations in currency exchange rates.

Since Inspirato conducts a significant portion of its business outside the U.S. but reports its results in U.S. dollars, it faces exposure to adverse movements in currency exchange rates, which may cause its revenue and operating results to differ materially from expectations. In addition, fluctuation in its mix of U.S. and foreign currency denominated transactions may contribute to this effect as exchange rates vary. Moreover, as a result of these exchange rate fluctuations, revenue, cost of revenue, operating expenses and other operating results may differ materially from expectations when translated from the local currency into U.S. dollars upon consolidation. For example, if the U.S. dollar weakens relative to foreign currencies Inspirato’s non-U.S. expenses would be adversely affected when translated into U.S. dollars. Conversely, a rise in the U.S. dollar relative to foreign currencies would decrease Inspirato’s non-U.S. expenses when translated into U.S. dollars. As exchange rates vary, cost of revenue, operating expenses and other operating results, when translated, may differ materially from expectations. In addition, Inspirato’s operating results are subject to fluctuation if its mix of U.S. and foreign currency denominated transactions and expenses changes in the future. Inspirato may enter into hedging arrangements in order to manage foreign currency exposure, but such activity may not completely eliminate fluctuations in its operating results.

 

70


Table of Contents
Index to Financial Statements

Inspirato is subject to claims and liabilities associated with potential health and safety issues and hazardous substances at Inspirato’s properties.

Inspirato and the owners of its leased properties are exposed to potentially significant liabilities and compliance costs as a result of any hazardous or unsafe conditions at its properties, including under environmental, health and safety laws and regulations. These laws and regulations govern matters such as the release, use, storage and disposal of hazardous and toxic substances, and unsafe or unhealthy conditions at hotels and other residential premises. Failure to comply with these laws, including any required permits or licenses, can result in substantial fines or possible revocation of the authority to conduct operations. Any impairment of Inspirato’s or its landlords’ authority to permit hospitality operations at its leased properties, due to these factors, could harm its reputation and revenue. Inspirato could also be liable under environmental, health and safety laws for the costs of investigation, removal or remediation of hazardous or toxic substances or unsafe or unhealthy conditions at its currently or formerly leased or managed properties, even if it did not know of or cause the presence or release of the substances or conditions, and even where this is contractually the responsibility of its landlord.

The presence or release of toxic, unhealthy or hazardous substances or conditions at Inspirato’s properties, such as asbestos, mold, radon gas, or lead, could result in governmental investigations and third-party claims for personal injury, property or natural resource damages, business interruption or other losses, and costly disputes with its landlords and subscribers. Inspirato may encounter claims, governmental investigations and potential enforcement actions about property conditions and related matters in the future. These claims and the need to investigate, remediate or otherwise address hazardous, toxic or unsafe conditions could adversely affect its business, reputation, results of operations and financial condition. Environmental, health and safety requirements have also become increasingly stringent, and Inspirato’s costs may increase as a result. New or revised laws and regulations or new interpretations of existing laws and regulations, such as those related to climate change, could affect the operation of Inspirato’s properties or result in significant additional expense and restrictions on its business operations.

Inspirato relies on its third-party landlords to deliver properties to it in a safe and suitable condition, and it does not undertake to independently verify the safety, suitability or condition of the properties it leases. Inspirato expects to continue to rely on landlords to disclose information about their properties, though such disclosures may be inaccurate or incomplete, and to keep the properties in a safe and compliant condition in accordance with the terms of its leases and applicable law. If unsafe or unhealthy conditions are present or develop at Inspirato’s properties, its subscribers may be harmed, it may be subject to expensive and disruptive claims, and its reputation, business, results of operations, and financial condition could be materially and adversely affected.

Operating as a public company will require the Combined Company to incur substantial costs and will require substantial management attention. In addition, key members of Inspirato’s management team have limited experience managing a public company.

After the Business Combination, the Combined Company will incur substantial legal, accounting, and other expenses that Inspirato did not incur as a private company before the Business Combination. For example, the Combined Company is subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules and regulations of the SEC, and the listing standards of Nasdaq. Compliance with these rules and regulations will increase its legal and financial compliance costs, and increase demand on its systems, particularly after the Combined Company is no longer an “emerging growth company” under SEC rules. In addition, the Combined Company may be subject to stockholder activism, which can lead to additional substantial costs, distract management, and impact the manner in which the Combined Company operates its business in ways that it cannot currently anticipate. As a result of disclosure of information in this proxy statement/prospectus/consent solicitation statement and in filings required of a public company, Inspirato’s business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors.

 

71


Table of Contents
Index to Financial Statements

Some members of the Combined Company’s management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Inspirato’s management team may not successfully or efficiently manage its transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from Inspirato’s senior management and could divert their attention away from the day-to-day management of its business, which could adversely affect its business, financial condition, and results of operations.

Inspirato’s management has identified material weaknesses in their internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of its financial statements or cause it to fail to meet its periodic reporting obligations.

Inspirato has identified and is currently working to remediate material weaknesses in internal control over financial reporting related to its financial closing and reporting process and to its information technology general controls (“ITGCs”). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

As a public company, the Combined Company will be required to maintain an effective system of internal controls over financial reporting and to report any material weaknesses in such internal controls. Inspirato is currently a private company that does not have to comply with these requirements and historically had limited accounting and financial reporting personnel and other resources in its internal control over financial reporting.

Inspirato’s management has concluded that the material weaknesses in its internal control over financial reporting are due to the fact that Inspirato has lacked sufficient number of personnel with the appropriate level of knowledge and experience in the application of GAAP, including the application of new accounting standards, and in the design and implementation of internal controls and has not had the necessary business processes and related internal controls. The material weakness relating to ITGCs are due to a lack of the design and implementation of certain ITGCs related to Inspirato’s financial applications and data being adequately restricted. To remediate these material weaknesses, Inspirato has hired personnel with appropriate levels of knowledge and also engaged third-party consultants and is developing formal policies and procedures over its financial closing and reporting processes and ITGCs. Inspirato believes these measures will remediate the material weaknesses identified. Inspirato is committed to continuing to improve its internal control over financial reporting and will continue to review and improve its internal control over financial reporting controls and ITGCs.

While Inspirato continues to remediate the material weaknesses described above, Inspirato cannot predict the success of such remediation steps. If the steps taken are insufficient to remediate the material weaknesses successfully and otherwise establish and maintain an effective system of internal control over financial reporting, the reliability of Inspirato’s financial reporting, investor confidence in Inspirato, and the value of the Combined Company Common Stock could be materially and adversely affected. Inspirato can give no assurance that the implementation of this plan will remediate these deficiencies in internal control or that additional material weaknesses or significant deficiencies in Inspirato’s internal control over financial reporting will not be identified in the future. Inspirato’s failure to implement and maintain effective internal controls over financial reporting could result in errors in the Combined Company’s financial statements that could result in a restatement of its financial statements, and could cause the Combined Company to fail to meet its reporting obligations, any of which could diminish investor confidence in the Combined Company and cause a decline in the price of the Combined Company Common Stock. Failure to implement and maintain effective internal controls over financial reporting could also subject the Combined Company to potential delisting from Nasdaq or any other stock exchange on which its stock is listed or to other regulatory investigations and civil or criminal sanctions.

 

72


Table of Contents
Index to Financial Statements

Risks Related to Our Organizational Structure

The Combined Company’s principal asset after the consummation of the Business Combination will be its interest in Inspirato, and the Combined Company will be dependent upon Inspirato and its consolidated subsidiaries for its results of operations, cash flows, and distributions.

Upon the consummation of the Business Combination, the Combined Company will be a holding company and will have no material assets other than its ownership of New Common Units. As such, the Combined Company will have no independent means of generating revenue or cash flow, and its ability to pay taxes and operating expenses, including payments under the Tax Receivable Agreement, or declare and pay dividends in the future, if any, will be dependent upon the results of operations and cash flows of Inspirato and its consolidated subsidiaries and distributions the Combined Company receives from Inspirato. There can be no assurance that Inspirato and its subsidiaries will generate sufficient cash flow to distribute funds to the Combined Company or that applicable state law and contractual restrictions, including negative covenants in its debt instruments, will permit such distributions.

The Combined Company’s ability to pay taxes and expenses, including payments under the Tax Receivable Agreement, may be limited by its structure.

Upon the consummation of the Business Combination, the Combined Company’s principal asset will be a controlling equity interest in Inspirato. As such, the Combined Company will have no independent means of generating revenue. Inspirato will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to U.S. federal income tax. Instead, taxable income will be allocated to holders of its New Common Units, including the Combined Company. Accordingly, the Combined Company will incur income taxes on its allocable share of any net taxable income of Inspirato and will also incur expenses related to its operations. Pursuant to the A&R Inspirato LLCA, Inspirato will make cash distributions to the owners of New Common Units in an amount sufficient to fund their tax obligations in respect of the taxable income for the taxable year in excess of taxable losses of Inspirato allocated to them, to the extent previous tax distributions from Inspirato for the taxable year have been insufficient. In addition to tax expenses, the Combined Company also will incur expenses related to its operations, plus payments under the Tax Receivable Agreement, which may be substantial. The Combined Company intends to cause Inspirato to make distributions or, in the case of certain expenses, payments in an amount sufficient to allow it to pay its taxes and operating expenses, including distributions to fund any payments due under the Tax Receivable Agreement. However, Inspirato’s ability to make such distributions may be subject to various limitations and restrictions. If the Combined Company does not have sufficient funds to pay tax or other liabilities or to fund its operations (as a result of Inspirato’s inability to make distributions due to various limitations and restrictions or as a result of the acceleration of the obligations under the Tax Receivable Agreement), it may have to borrow funds and thus its liquidity and financial condition could be materially and adversely affected. To the extent that the Combined Company does not make payments under the Tax Receivable Agreement when due, as a result of having insufficient funds or otherwise, interest will generally accrue at a rate equal to LIBOR plus 100 basis points or in some cases LIBOR plus 500 basis points until paid. Nonpayment of the Combined Company’s obligations for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement, and therefore, may accelerate payments due under the Tax Receivable Agreement resulting in a lump-sum payment.

The Combined Company will be required to pay the Flow-Through Sellers and Blocker Sellers for certain tax benefits it may claim, and it is expected that the payments the Combined Company will be required to make may be substantial.

Future exchanges or redemptions of New Common Units for cash or shares Combined Company Class A Common Stock are expected to produce favorable tax attributes for the Combined Company. When the Combined Company acquires New Common Units from Flow-Through Sellers through these exchanges or redemptions, anticipated tax basis adjustments are likely to increase (for tax purposes) the Combined Company’s depreciation and amortization deductions and therefore reduce the amount of income tax it would be required to

 

73


Table of Contents
Index to Financial Statements

pay in the future in the absence of this increased basis. This increased tax basis may also decrease the gain (or increase the loss) on future dispositions of certain assets to the extent the tax basis is allocated to those assets. Under the Tax Receivable Agreement, PubCo generally expects to retain the benefit of 15% of the applicable tax savings after its payment obligations as described below are taken into account.

Upon the consummation of the Business Combination, PubCo will be a party to the Tax Receivable Agreement. Under the Tax Receivable Agreement, PubCo generally will be required to pay to the Blocker Sellers or Flow-Through Sellers, as applicable, 85% of the tax savings that PubCo realizes as a result of increases in tax basis in Inspirato’s assets resulting from the sale of New Common Units for the consideration paid pursuant to the Business Combination Agreement and the future exchange of New Common Units for shares of Combined Company Class A Common Stock (or cash) pursuant to the A&R Inspirato LLCA, and certain pre-existing tax attributes of the Blockers, as well as certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement.

The increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges or redemptions, the price of Combined Company Class A Common Stock at the time of the exchange or redemption, whether such exchanges or redemptions are taxable, the amount and timing of the taxable income PubCo generates in the future, the U.S. federal and state tax rates then applicable, and the portion of its payments under the Tax Receivable Agreement constituting imputed interest. Payments under the Tax Receivable Agreement are expected to give rise to certain additional tax benefits attributable to either further increases in basis or in the form of deductions for imputed interest, depending on the circumstances. Any such benefits are covered by the Tax Receivable Agreement and will increase the amounts due thereunder. In addition, the Tax Receivable Agreement will provide for interest, generally at a rate equal to LIBOR plus 100 basis points or in some cases LIBOR plus 500 basis points, accrued from the due date (without extensions) of the corresponding tax return to the date of payment specified by the Tax Receivable Agreement.

PubCo anticipates that the payments that it will be required to make under the Tax Receivable Agreement may be substantial. To the extent that PubCo is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid. Nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore may accelerate payments due under the Tax Receivable Agreement. Furthermore, PubCo’s future obligation to make payments under the Tax Receivable Agreement could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be deemed realized under the Tax Receivable Agreement. See the section titled “Certain Agreements Related to the Business CombinationTax Receivable Agreement” for a discussion of the Tax Receivable Agreement and the related benefits likely to be realized by the Flow-Through Sellers and Blocker Sellers.

Payments under the Tax Receivable Agreement will be based on the tax reporting positions that the Combined Company determines. Although PubCo is not aware of any issue that would cause the U.S. Internal Revenue Service, or IRS, to challenge a tax basis increase or other tax attributes subject to the Tax Receivable Agreement, if any subsequent disallowance of tax basis or other benefits were so determined by the IRS, generally it would not be reimbursed for any payments previously made under the Tax Receivable Agreement (although it would reduce future amounts otherwise payable under the Tax Receivable Agreement). As a result, payments could be made under the Tax Receivable Agreement in excess of the tax savings that PubCo realizes in respect of the attributes to which the Tax Receivable Agreement relate.

The amounts that PubCo may be required to pay under the Tax Receivable Agreement may be accelerated in certain circumstances and may also significantly exceed the actual tax benefits that it ultimately realizes.

The Tax Receivable Agreement provides that if certain mergers, asset sales, other forms of business combination, or other changes of control were to occur or if, at any time, PubCo elects an early termination of the

 

74


Table of Contents
Index to Financial Statements

Tax Receivable Agreement, then the Tax Receivable Agreement will terminate and its obligations, or its successor’s obligations, to make future payments under the Tax Receivable Agreement would accelerate and become immediately due and payable. The amount due and payable in those circumstances is determined based on certain assumptions, including an assumption that PubCo would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement. PubCo may need to incur debt to finance payments under the Tax Receivable Agreement to the extent its cash resources are insufficient to meet its obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. In these situations, PubCo’s obligations under the Tax Receivable Agreement could have a substantial negative impact on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control. There can be no assurance that PubCo will be able to finance its obligations under the Tax Receivable Agreement.

PubCo’s organizational structure, including the Tax Receivable Agreement, confers certain benefits upon holders of New Common Units that will not benefit holders of the Combined Company Class A Common Stock to the same extent as it will benefit the holders of New Common Units.

The Combined Company’s organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the holders of New Common Units (other than PubCo and its Subsidiaries) that will not benefit the holders of Combined Company Class A Common Stock to the same extent as it will benefit such holders of New Common Units. PubCo will enter into the Tax Receivable Agreement with the Blocker Sellers and Flow-Through Sellers and it will provide for the payment by PubCo to the Blocker Sellers or Flow-Through Sellers, as applicable, of 85% of the tax savings that PubCo realizes as a result of increases in tax basis in Inspirato’s assets resulting from the sale of New Common Units for the consideration paid pursuant to the Business Combination Agreement and the future exchange of New Common Units for shares of Combined Company Class A Common Stock (or cash) pursuant to the A&R Inspirato LLCA, and certain pre-existing tax attributes of the Blockers, as well as certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. See the section titled “Certain Agreements Related to the Business CombinationTax Receivable Agreement” for additional information. Although PubCo will retain 15% of the amount of such tax benefits, this and other aspects of its organizational structure may adversely impact the future trading market for the Combined Company Class A Common Stock.

Subject to the obligation of Inspirato to make tax distributions and to reimburse PubCo for corporate and other overhead expenses, the Inspirato LLC Board will have the right to determine when distributions will be made to the Inspirato unitholders and the amount of any such distributions. Following the completion of the Business Combination, if the Inspirato LLC Board authorizes a distribution, such distribution will be made to the Inspirato unitholders, including PubCo, on a pro rata basis in accordance with their respective percentage ownership of New Common Units. However, PubCo is not required to distribute any corresponding amounts as dividends to the holders of Combined Company Class A Common Stock. Further, because PubCo may have liabilities for taxes following the completion of the Business Combination, under the Tax Receivable Agreement or otherwise, any amounts PubCo may distribute as dividends to the holders of the Combined Company Class A Common Stock could be less on a per share basis than the amounts distributed by Inspirato to the holders of New Common Units on a per unit basis.

Generally, PubCo will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are disallowed.

If the IRS challenges the tax basis or other tax attributes that give rise to payments under the Tax Receivable Agreement and the tax basis or other tax attributes are subsequently required to be adjusted, generally the recipients of payments under the Tax Receivable Agreement will not reimburse PubCo for any payments previously made to them. Instead, any excess cash payments made by PubCo under the Tax Receivable Agreement will be netted against any future cash payments that PubCo might otherwise be required to make

 

75


Table of Contents
Index to Financial Statements

under the terms of the Tax Receivable Agreement. However, a challenge to any tax benefits initially claimed by PubCo may not arise for a number of years following the initial time of such payment or, even if challenged early, such excess cash payment may be greater than the amount of future cash payments that PubCo might otherwise be required to make under the terms of the Tax Receivable Agreement and, as a result, there might not be future cash payments to net against. The applicable U.S. federal income tax rules are complex and factual in nature, and there can be no assurance that the IRS or a court will not disagree with PubCo’s tax reporting positions. As a result, it is possible that PubCo could make cash payments under the Tax Receivable Agreement that are substantially greater than its actual cash tax savings. See the section titled “Certain Agreements Related to the Business CombinationTax Receivable Agreement.

The disparity between the U.S. corporate tax rate and the U.S. tax rate applicable to non-corporate Members of Inspirato may complicate PubCo’s ability to maintain its intended capital structure, which could impose transaction costs on it and require management attention.

If and when Inspirato generates taxable income, Inspirato will generally make quarterly tax distributions to each of its Members, including PubCo, based on each Member’s allocable share of net taxable income (calculated under certain assumptions) multiplied by an assumed tax rate. The assumed tax rate for this purpose will be the highest effective marginal combined federal, state, and local income tax rate applicable to an individual or corporate resident of California (whichever is higher). Currently, the highest marginal federal income tax rate applicable to corporations such as PubCo is significantly lower than the highest marginal federal income tax rate applicable to non-corporate taxpayers. As a result of this disparity, PubCo expects to receive tax distributions from Inspirato significantly in excess of its actual tax liability and its obligations under the Tax Receivable Agreement, which could result in it accumulating a significant amount of cash. This would complicate the Combined Company’s ability to maintain certain aspects of its capital structure. Such cash, if retained, could cause the value of a New Common Unit to deviate from the value of a share of Combined Company Class A Common Stock. In addition, such cash, if used to purchase additional New Common Units, could result in deviation from the one-to-one relationship between Combined Company Class A Common Stock outstanding and New Common Units held by PubCo and its Subsidiaries unless a corresponding number of additional shares of Combined Company Class A Common Stock are distributed as a stock dividend. PubCo may, if permitted under its debt agreements, choose to pay dividends to all holders of Combined Company Class A Common Stock with any excess cash. These considerations could have unintended impacts on the pricing of the Combined Company Class A Common Stock and may impose transaction costs and require management efforts to address on a recurring basis. To the extent that PubCo does not distribute such excess cash as dividends on Combined Company Class A Common Stock and instead, for example, holds such cash balances or lends them to Inspirato, holders of New Common Units during a period in which PubCo holds such cash balances could benefit from the value attributable to such cash balances as a result of redeeming or exchanging their New Common Units and obtaining ownership of Combined Company Class A Common Stock (or a cash payment based on the value of Combined Company Class A Common Stock). In such case, these holders of New Common Units could receive disproportionate value for their New Common Units exchanged during this time frame.

The Blocker Mergers may not qualify as “reorganizations” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended

In the opinion of BDO USA LLP, each Blocker Merger should qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code. To qualify as a “reorganization” within the meaning of Section 368(a) of the Code, a transaction must satisfy certain requirements, including, among others, that the acquiring corporation (or, in the case of certain reorganizations structured similarly to the Blocker Mergers, its corporate parent) continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business, in each case, within the meaning of Treasury regulations Section 1.368-1(d). However, due to the absence of guidance bearing directly on how the foregoing rules apply

 

76


Table of Contents
Index to Financial Statements

in the case of an acquisition of a corporation with only a minority interest in a limited liability company, such as each Blocker, the qualification of each Blocker Mergers as a “reorganization” within the meaning of Section 368(a) of the Code is not free from doubt. An opinion of an independent registered public accounting firm represents the judgment of the firm and is not binding on the IRS or any court, and the IRS or a court may disagree with the conclusions in the opinion. Further, neither Thayer, Inspirato nor any of the Blockers have sought or intend to seek any ruling from the IRS regarding the qualification of any of the Blocker Mergers as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, notwithstanding the opinion of BDO USA LLP, there can be no assurance that the IRS will not assert that one or more of the Blocker Mergers fails to qualify as a “reorganization” or that a court would not sustain such a challenge. In the Business Combination Agreement, each of Thayer, the Blockers and Inspirato agrees to use its commercially reasonable efforts not to take any action that would reasonably be expected to cause any Blocker Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

If, notwithstanding the above, any of the Blocker Mergers fails to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the applicable Blocker Merger would be a fully taxable transaction for U.S. federal income tax purposes for the applicable Blocker (which will have been merged into the applicable Blocker Merger Sub that survives the merger as a subsidiary of Thayer) and the holders of the applicable Blocker Equity Interests.

Risks Related to Intellectual Property and Data Privacy

Inspirato faces risks related to its intellectual property.

Inspirato’s intellectual property is important to its success, and Inspirato relies on domain name registrations, registered and unregistered trademarks, copyright law, trade secret protection and confidentiality and/or license agreements with its employees, third party providers, partners and others to protect its proprietary rights. Inspirato has also applied for patent rights with respect to certain aspects of its technology. Inspirato endeavors to defend its intellectual property rights diligently, but intellectual property litigation is expensive and time-consuming, and may divert managerial attention and resources from its business objectives. Inspirato may not be able to successfully defend its intellectual property rights, which could have a material adverse effect on its business, brand, and results of operations.

From time to time, in the ordinary course of business, Inspirato may be subject to legal proceedings and claims relating to the intellectual property rights of others, and Inspirato expects that third parties will continue to assert intellectual property claims, in particular trademark claims, against it, particularly as Inspirato expands the complexity and scope of its business. Successful claims against Inspirato could result in a significant monetary liability or prevent Inspirato from operating its business, or portions of its business. In addition, resolution of claims may require Inspirato to obtain licenses to use intellectual property rights belonging to third parties, which may be expensive to procure, or to cease using those rights altogether. Any of these events could have a material adverse effect on its business, results of operations and financial condition.

Inspirato’s technology contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict its ability to operate as intended or could increase its costs.

Certain of Inspirato’s owned and third-party technology contains software modules licensed to it by third-party authors under “open source” licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it easier for others to compromise or copy Inspirato’s technology.

Some open source licenses contain requirements that could obligate Inspirato to make available source code for modifications or derivative works it creates based upon the type of open source software it uses, or grant

 

77


Table of Contents
Index to Financial Statements

other licenses to its intellectual property. If Inspirato combines its proprietary software with open source software in a certain manner, it could, under certain open source licenses, be required to release the source code of its proprietary software to the public. This would allow its competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of its competitive advantages. Alternatively, to avoid the public release of the affected portions of its source code, Inspirato could be required to expend substantial time and resources to re-engineer some or all of its software.

Although Inspirato monitors its use of open source software to avoid subjecting its technology to conditions it does not intend, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on Inspirato’s ability to provide or distribute its technology. From time to time, there have been claims challenging the use of open source software against companies that incorporate open source software into their solutions. As a result, Inspirato could be subject to lawsuits by parties claiming violation by Inspirato of the terms of an open source license or ownership of what such parties believe to be their open source software. Moreover, Inspirato cannot assure you that its processes for controlling its use of open source software in its technology will be effective. If Inspirato is held to have breached or failed to fully comply with all the terms and conditions of an open source software license, it could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing its offerings on terms that may not be economically feasible, re-engineer its technology, discontinue or delay the provision of its offerings if re-engineering could not be accomplished on a timely basis or make generally available, in source code form, its proprietary code, any of which could adversely affect its business, financial condition and results of operations.

Inspirato’s processing, storage, use and disclosure of personal data exposes it to risks of internal or external security breaches and incidents and could give rise to liabilities and/or damage to reputation.

The security of data when engaging in electronic commerce is essential to maintaining consumer confidence. Among other things, Inspirato may collect subscribers’ credit card data, proof of identity and other personal information as part of the booking process. Additionally, Inspirato collects and processes other personal information, such as personal information of its employees and contractors, and it processes and maintains other confidential and proprietary information, such as its confidential and proprietary business information. Cyberattacks by individuals, groups of hackers and state-sponsored organizations are increasing in frequency and sophistication and are constantly evolving. Because Inspirato’s subscribers are generally high-income or high net-worth individuals, Inspirato may be particularly attractive as a target for cyberattacks. Security breaches and incidents may also occur due to misuse or misappropriation of subscribers’ personal data by employees or third-party contractors. Additionally, Inspirato makes use of third-party service providers to store and otherwise process data on its behalf, and they face similar risks of security breaches and incidents. Any security breach, cyberattack, or other security incident, whether instigated internally or externally on Inspirato’s systems or third-party systems, or the perception that any such breach or incident has occurred, could significantly harm Inspirato’s reputation and therefore its business, brand, market share and results of operations. It is possible that computer circumvention capabilities, new discoveries or advances or other developments, including Inspirato’s own acts or omissions, could result in a compromise or systems used in Inspirato’s business or a security breach or incident impacting breach of subscriber data or other data stored or processed by Inspirato or on its behalf. For example, third parties may attempt to fraudulently induce employees or subscriber services contractors, travel service provider partners or consumers to disclose usernames, passwords or other sensitive information (“phishing”), which may in turn be used to access Inspirato’s information technology systems or to defraud its partners or subscribers. Third parties may also attempt to take over subscribers’ accounts by using passwords, usernames and other personal information obtained elsewhere. Inspirato has experienced targeted and organized phishing and account takeover attacks and may experience more in the future. These risks are likely to increase as Inspirato expands its business and stores and processes more data, including personal information. Inspirato’s efforts to protect information from unauthorized access may be unsuccessful or may result in the rejection of legitimate attempts to book reservations, each of which could result in lost business and have a material adverse effect on its business, reputation and results of operations.

 

78


Table of Contents
Index to Financial Statements

Inspirato’s existing security measures may not be successful in preventing security breaches and other security incidents. A party (whether internal, external, an affiliate or unrelated third party) that is able to circumvent Inspirato’s security systems could gain unauthorized access to Inspirato’s systems and steal subscriber information, transaction data or other information. In the last few years, several major companies experienced high-profile security breaches that exposed their systems and information and/or their consumers’ or employees’ personal information, and it is expected that these types of events will continue to occur. Inspirato is increasing resources to protect against security breaches and incidents. It has experienced and responded to cyberattacks, which it believes have not had a significant impact on the integrity of its systems or the security of data, including subscriber data maintained by it. These issues are likely to become more difficult to manage as Inspirato expands the number of places where it operates and the number of its subscribers, and as the tools and techniques used in such attacks become more advanced. Security breaches or incidents, including ransomware attacks and other cyberattacks, could result in severe damage to its information technology infrastructure, including damage that could impair its ability to book stays, collect payments or otherwise operate its business, or the ability of consumers to make reservations or access its properties or in-room features and services, as well as loss of subscriber, financial or other data that could materially and adversely affect its ability to conduct its business or satisfy its commercial obligations. Security breaches and cyberattacks or other security incidents, or the perception that any of these has occurred, could also result in negative publicity, damage its reputation, expose it to risk of loss or litigation and possible liability, subject it to regulatory investigations and other proceedings, and penalties and sanctions, or cause consumers to lose confidence in its security and choose to stay with its competitors, any of which would have a negative effect on its brand, market share, results of operations and financial condition. Inspirato’s insurance policies have coverage limits and deductibles and may not be adequate to reimburse it for all losses caused by security breaches and incidents.

Inspirato also faces risks associated with security breaches affecting third parties conducting business over the Internet. Consumers generally are concerned with security and privacy on the Internet, and any publicized security problems could negatively affect consumers’ willingness to provide private information or affect online commercial transactions generally. Additionally, Inspirato’s subscribers could be affected by security breaches and incidents at third parties such as travel service providers. A security breach at any such third party could be perceived by consumers as a security breach of Inspirato’s systems and in any event could result in negative publicity, subject it to notification requirements, damage its reputation, expose it to risk of loss or litigation and possible liability and subject it to regulatory penalties and sanctions. In addition, such third parties may not comply with applicable disclosure requirements, which could expose Inspirato to liability.

If Inspirato fails to comply with federal, state, and foreign laws and regulations relating to privacy, data protection, and information security, it may face potentially significant liability, negative publicity, and an erosion of trust, and increased regulation could materially adversely affect its business, results of operations, and financial condition.

In Inspirato’s processing of travel transactions and information about subscribers and their stays, it receives and stores a large volume of data, including personal data and other data relating to individuals. Numerous federal, state, local, and international laws and regulations relate to privacy, data protection, information security, and the storing, sharing, use, processing, transfer, disclosure, and protection of personal information and other content, the scope of which are changing, subject to differing interpretations, and may be inconsistent among jurisdictions, or conflict with other rules. These data protection and privacy-related laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. For example, the EU’s General Data Protection Regulation (the GDPR), in effect since May 25, 2018, imposes more stringent data protection requirements than previous EU data protection laws and provides for penalties for noncompliance of up to the greater of €20 million or four percent of worldwide annual revenues. In addition, the Court of Justice of the European Union (CJEU) invalidated the U.S.-EU Privacy Shield in July 2020. The GDPR requires certain measures in order for the personal data of EU residents to be transferred to the U.S. for processing. The U.S.-EU Privacy Shield was one such measure. The CJEU’s decision also called into question the validity of the EU Standard Contractual Clauses (SCCs) — the other widely used means for

 

79


Table of Contents
Index to Financial Statements

transferring data to the U.S. The CJEU opinion found the SCCs a valid basis for transfer but found that a data processor must also have in place additional safeguards to provide GDPR-level protection for EU personal data. The CJEU opinion has necessitated additional steps to legitimize impacted personal data transfers, and Inspirato may find it necessary or desirable to further modify its data handling practices in connection with this decision or future legal challenges relating to cross-border data transfers. This could result in increased costs of compliance and limitations on Inspirato and its service providers and other third parties it works with. This CJEU decision or future legal challenges also could result in Inspirato being required to implement duplicative, and potentially expensive, information technology infrastructure and business operations in Europe or could limit its ability to collect or process personal information in Europe, and may serve as a basis for its personal data handling practices, or those of its service providers or other third parties it works with, to be challenged. Any of these changes with respect to EU data protection law could disrupt Inspirato’s business and otherwise adversely impact its business, financial condition and operating results.

The number of data protection laws globally is rising as more jurisdictions explore new or updated comprehensive data protection regimes. In the U.S., the California Consumer Privacy Act (the CCPA) went into effect on January 1, 2020 and accompanying regulations were issued by the California Office of the Attorney General in June 2020. Among other things, the CCPA requires covered companies to provide new disclosures to California consumers and afford such consumers new abilities to access and delete their personal information, and to opt-out of certain sales of personal information. On November 3, 2020, California voters approved the California Privacy Rights and Enforcement Act (the CPRA), which is expected to go into effect on January 1, 2023. The CPRA significantly modifies the CCPA and further aligns California privacy laws with the GDPR.

Similar legislation has been proposed or adopted in other states. On March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act, or CDPA, a comprehensive privacy statute that becomes effective on January 1, 2023 and shares similarities with the CCPA, CPRA, and legislation proposed in other states. Colorado enacted the similar Colorado Privacy Act on June 8, 2021, which will become effective July 1, 2023. Aspects of the CCPA, the CPRA and these other state laws and regulations, as well as their enforcement, remain unclear.

Inspirato will need to closely monitor developments, including enforcement actions or private litigation under the GDPR, CCPA, CPRA, and other laws to determine whether Inspirato will need to modify its data processing practices and policies, which may result in Inspirato incurring additional costs and expenses in an effort to comply.

Inspirato is also subject to the terms of its privacy policies and contractual obligations to third parties related to privacy, data protection, and information security. Inspirato strives to comply with applicable laws, regulations, policies, and other legal obligations relating to privacy, data protection, and information security to the extent possible. However, the regulatory framework for privacy and data protection worldwide is evolving rapidly, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or Inspirato’s practices.

Any failure or perceived failure by Inspirato to comply with its privacy policies, its privacy-related obligations to subscribers or other third parties, applicable laws or regulations, or any of its other legal obligations could materially adversely affect its business.

Additionally, if third parties Inspirato works with, such as sub-processors, vendors, or developers, violate applicable laws or regulations, contractual obligations, or its policies — or if it is perceived that such violations have occurred — such actual or perceived violations may also have an adverse effect on its business. Further, any significant change to applicable laws, regulations, or industry practices regarding the collection, use, retention, security, disclosure, or other processing of data, or regarding the manner in which the express or implied consent of users for the collection, use, retention, disclosure, or other processing of data is obtained, could increase its costs and require Inspirato to modify its business practices.

 

80


Table of Contents
Index to Financial Statements

Risks Related to Inspirato’s Reliance on Third Parties

Inspirato relies on partners and third-party service providers and if such third parties do not perform adequately or terminate their relationships, Inspirato’s costs may increase and its business, financial condition and results of operations could be adversely affected.

Inspirato’s success depends in part on its relationships with its partners and third-party service providers. For example, Inspirato uses third-parties to provide housekeeping services and maintain its subscription platform. If any of Inspirato’s third-party providers terminates their relationship with Inspirato or refuses to renew their agreement with Inspirato on commercially reasonable terms, Inspirato would need to find alternate providers and may not be able to secure similar terms or replace such providers in acceptable time frames. Moreover, Inspirato is limited by exclusivity terms and other restrictions with certain third-party service providers which may limit Inspirato’s ability to enter into relationships with new or alternative third-party service providers.

Inspirato’s relationships with its partners continue to shift as industry dynamics change, and its partners may be less willing to partner with Inspirato as such shifts occur. If any significant partner decided to compete with Inspirato, it could adversely impact Inspirato’s sales and harm Inspirato’s business, operating results, and prospects.

Furthermore, any negative publicity related to any of its third-party partners, including any publicity related to quality standards or safety concerns, could adversely affect its reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

Inspirato depends on landlords for maintenance and other significant obligations related to its properties, and any failures in this area could hurt its business.

Inspirato does not own any of its properties and manages and operates them under leases or other occupancy arrangements with third-party landlords. At certain of its properties, Inspirato’s subscriber units comprise only a portion of the building, and common areas and amenities are often shared with other tenants or unit owners. Inspirato depends on its landlords to deliver properties in a suitable condition and to perform important maintenance, repair and other activities that affect Inspirato’s operations and subscribers’ experience at certain properties. Inspirato has no control over common areas of buildings in which certain of its units are located. If Inspirato’s landlords do not fulfill their obligations or fail to maintain and operate their buildings appropriately, Inspirato’s business, reputation and subscriber relationships may suffer. The nature of Inspirato’s rights and responsibilities under its leases may be subject to interpretation and will from time to time give rise to disagreements, which may include disagreements over the timing and amount of capital investments or improvements, operational and repair responsibilities, liability to third parties, a party’s right to terminate a lease, and reimbursement for certain renovations and costs.

Inspirato seeks to resolve any disagreements and develop and maintain positive relations with current and potential landlords, but it cannot always do so. Failure to resolve such disagreements has resulted in litigation in the past and could result in litigation in the future. If any such litigation results in an adverse judgment, settlement, or court order, Inspirato could suffer significant losses, its profits could be reduced, and its ability to operate its business could be constrained.

Inspirato incorporates technology from third parties into Inspirato’s technology.

Inspirato incorporates technology from third parties into Inspirato’s technology. Inspirato cannot be certain that its licensors are not infringing the intellectual property rights of others or that its suppliers and licensors have sufficient rights to the technology in all jurisdictions in which Inspirato may operate. If Inspirato is unable to obtain or maintain rights to any of this technology because of intellectual property infringement claims brought by third parties against its suppliers and licensors or against Inspirato, Inspirato’s ability to operate some aspects of its business could be limited and its business could be harmed. In addition, some of Inspirato’s license

 

81


Table of Contents
Index to Financial Statements

agreements may be terminated by its licensors for convenience. If Inspirato is unable to obtain necessary technology from third parties, it may be forced to acquire, license or develop alternate technology, which may require significant time and effort and may be of lower quality or performance standards. This would limit and delay its ability to provide new or competitive offerings and increase its costs. In addition, Inspirato may be unable to enter into new agreements on commercially reasonable terms or develop its own technologies and amenities relying on or containing technology previously obtained from third parties. If alternate technology cannot be obtained, licensed or developed, Inspirato may not be able to offer certain functionality to subscribers or manage its business as it had intended, which could adversely affect its business, financial condition and results of operations.

Inspirato relies on third-party payment processors to process payments made by subscribers, and if it cannot manage its relationships with such third parties and other payment-related risks, its business, financial condition and results of operations could be adversely affected.

Inspirato relies on a limited number of third-party payment processors to process payments made by its subscribers. If any of its third-party payment processors terminates its relationship with Inspirato or refuses to renew its agreement with Inspirato on commercially reasonable terms, Inspirato would need to find an alternate payment processor, and may not be able to secure similar terms or replace such payment processor in an acceptable time frame. Furthermore, the software and services provided by its third-party payment processors may fail to meet Inspirato’s expectations, contain errors or vulnerabilities, be compromised or experience outages. Any of these risks could cause Inspirato to lose its ability to accept online payments or other payment transactions, any of which could adversely affect Inspirato’s ability to attract and retain subscribers or disrupt Inspirato’s operations.

Nearly all payments made by Inspirato’s subscribers are made by credit card, debit card or through third-party payment services, which subjects Inspirato to certain regulations and to the risk of fraud. Inspirato may in the future offer new payment options to subscribers that may be subject to additional regulations and risks. Inspirato is also subject to a number of other laws and regulations relating to the payments it accepts from its subscribers, including with respect to money laundering, money transfers, privacy and information security, and these regulations may differ by locality and can be expected to change over time.

For example, if Inspirato is deemed to be a money transmitter as defined by applicable regulation, it could be subject to certain laws, rules and regulations enforced by multiple authorities and governing bodies in the U.S. and numerous state and local agencies who may define money transmitter differently. For example, certain states may have a more expansive view of who qualifies as a money transmitter. Additionally, outside of the U.S., Inspirato could be subject to additional laws, rules and regulations related to the provision of payments and financial services, and if Inspirato expands into new jurisdictions, the foreign regulations and regulators governing its business that it is subject to will expand as well. If Inspirato is found to be a money transmitter under any applicable regulation and it is not in compliance with such regulations, Inspirato may be subject to fines or other penalties in one or more jurisdictions levied by federal or state or local regulators, including state Attorneys General, as well as those levied by foreign regulators. In addition to fines, penalties for failing to comply with applicable rules and regulations could include criminal and civil proceedings, forfeiture of significant assets or other enforcement actions. Inspirato could also be required to make changes to its business practices or compliance programs as a result of regulatory scrutiny.

Industry-specific payment regulations and standards are evolving and unfavorable industry-specific laws, regulations, interpretive positions or standards could harm Inspirato’s business.

Inspirato’s payment processors expect attestation of compliance with the Payment Card Industry Data Security Standard (the PCI-DSS). If Inspirato is unable to comply with the PCI-DSS or other applicable policies, guidelines or controls, or if its third-party payment processors are unable to obtain regulatory approval to use its services where required, its business may be harmed. For example, failing to maintain Inspirato’s Attestation of

 

82


Table of Contents
Index to Financial Statements

Compliance for the PCI-DSS could result in monthly fines or other adverse consequences until compliance is re-established via an external qualified security assessor, and may result in increased costs of processing credit card payments, as well as potential. Existing third parties or future business partnerships may opt out of processing payment card transactions if Inspirato is unable to achieve or maintain industry-specific certifications or other requirements or standards relevant to its subscribers and business partners.

Risks Related to Government Regulation

Unfavorable changes in, or interpretations or enforcement of, government regulations or taxation of the evolving hospitality, Internet and e-commerce industries could harm Inspirato’s operating results.

Inspirato operates in markets throughout the world, in jurisdictions which have various regulatory and taxation requirements. Its regulatory compliance efforts are burdensome because each local jurisdiction has different requirements, including with respect to zoning, licensing and permitting, sanitation, accessibility, taxes, employment, labor and health and safety, and regulations in the industry are constantly evolving. Inspirato operates units in multiple states and international jurisdictions. Its business efficiencies and economies of scale depend on reducing variations among properties and subscriber services across all jurisdictions in which it operates. Compliance requirements that vary significantly from jurisdiction to jurisdiction reduce Inspirato’s ability to achieve economies of scale, add compliance costs, and increase the potential liability for compliance deficiencies. In addition, laws or regulations that may harm Inspirato’s business could be adopted, or interpreted in a manner that affects its activities, including but not limited to the regulation of personal and consumer information, consumer advertising, labor laws, accessibility, health and safety, and real estate and hotel licensing and zoning requirements. Violations or new interpretations of these laws or regulations may result in penalties, disrupt Inspirato’s ability to operate existing properties or to develop new ones, negatively impact Inspirato’s subscriber relations or operations in other ways, increase its expenses, and damage its reputation and business.

In addition, since Inspirato began its operations, there have been, and continue to be, regulatory developments that affect the travel industry and the ability of companies like Inspirato to offer accommodations for specified durations or in certain neighborhoods. These include short-term occupancy regulations and restrictions adopted by municipalities and homeowners’ associations where Inspirato’s properties are located. In addition, many of the fundamental statutes and regulations that impose taxes or other obligations on travel and lodging companies were established before the growth of the Internet and e-commerce, which creates a risk of these laws being used in ways not originally intended that could harm Inspirato’s business. These and other similar new and newly interpreted regulations could increase Inspirato’s costs, require it to reduce or even cease operations in certain locations, reduce the diversity and number of units available for it to lease and offer to subscribers, and otherwise harm its business and operating results.

From time to time, Inspirato may become involved in challenges to, or disputes with government agencies regarding, laws and regulations. There can be no assurance that Inspirato will be successful in these challenges or disputes. Furthermore, if Inspirato were required to comply with regulations and government requests that negatively impact its relations with subscribers, its business, operating results and financial results could be adversely impacted.

Additionally, new, changed, or newly interpreted or applied laws, statutes, rules, regulations or ordinances, including tax laws, could increase landlords’ compliance, operating and other costs. This, in turn, could deter landlords from renting their properties to Inspirato, negatively affect lease renewals, impair landlords’ ability or willingness to repair and maintain leased properties, or increase costs of doing business. Any or all of these events could adversely impact Inspirato’s business and financial performance.

Furthermore, as Inspirato expands or changes its business and the services that it offers or the methods by which it offers them, it may become subject to additional legal regulations, tax requirements or other risks. Whether it complies with or challenges these additional regulations, Inspirato’s costs may increase and its business may otherwise be harmed.

 

83


Table of Contents
Index to Financial Statements

Changes in the Combined Company’s effective tax rate could harm its future operating results.

The Members of Inspirato, including PubCo, are subject to federal and state income taxes in the U.S. and in various international jurisdictions. The Combined Company’s provision for income taxes and its effective tax rate are subject to volatility and could be adversely affected by several factors, including:

 

   

earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates;

 

   

effects of certain non-tax-deductible expenses, including those arising from the requirement to expense stock-based compensation;

 

   

changes in the valuation of its deferred tax assets and liabilities;

 

   

adverse outcomes resulting from any tax audit, including transfer pricing adjustments with respect to intercompany transactions;

 

   

limitations on its ability to utilize its net operating losses and other deferred tax assets; and

 

   

changes in accounting principles or changes in tax laws and regulations, or the application of tax laws and regulations, including those relating to income tax nexus or possible U.S. changes to the deductibility of expenses attributable to foreign income or the foreign tax credit rules.

Significant judgment is required in the application of accounting guidance relating to uncertainty with respect to income taxes. If tax authorities challenge the Combined Company’s or Inspirato’s tax positions, any such challenges that are settled unfavorably could adversely impact the Combined Company’s provision for income taxes. Additionally, as the Inspirato Members exchange their New Common Units for shares of the Combined Company’s Class A Common Stock, PubCo will be responsible for a greater share of the tax payments due as a result of Inspirato’s operations.

The Combined Company’s and Inspirato’s structure and intercompany arrangements cause it to be subject to the tax laws of various jurisdictions, and it could be obligated to pay additional taxes, which could materially adversely affect its business, financial condition, results of operations, and prospects.

Inspirato is expanding its international operations and personnel to support its business in international markets. Inspirato generally conducts its international operations through wholly-owned subsidiaries and is or may be required to report its taxable income in various jurisdictions worldwide based upon its business operations in those jurisdictions. Inspirato’s intercompany relationships are subject to complex transfer pricing regulations administered by tax authorities in various jurisdictions. The amount of taxes Inspirato pays in different jurisdictions may depend on the application of the tax laws of such jurisdictions, including the U.S., to its international business activities, changes in tax rates, new or revised tax laws, interpretations of existing tax laws and policies, and Inspirato’s ability to operate its business in a manner consistent with its structure and intercompany arrangements. The relevant tax authorities may disagree with Inspirato’s determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and its position was not sustained, Inspirato could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of its operations.

If existing tax laws, rules or regulations are amended, or if new unfavorable tax laws, rules or regulations are enacted, including with respect to occupancy, sales, value-added, withholding, or revenue based taxes, unclaimed property, or other tax laws applicable to the multinational businesses, the results of these changes could increase Inspirato’s or the Combined Company’s tax liabilities. Possible outcomes include double taxation, multiple levels of taxation, or additional obligations, prospectively or retrospectively, including the potential imposition of interest and penalties. If such costs are passed on to Inspirato’s subscribers, demand for Inspirato’s products and services could decrease, or there could be increased costs to update or expand Inspirato’s technical or administrative infrastructure, or the scope of Inspirato’s business activities could be effectively limited should Inspirato decide not to conduct business in particular jurisdictions.

 

84


Table of Contents
Index to Financial Statements

The Combined Company and Inspirato are subject to federal, state, and local income, sales, and other taxes in the U.S. and income, withholding, transaction, and other taxes in numerous foreign jurisdictions. Evaluating their tax positions and its worldwide provision for taxes is complicated and requires exercising significant judgment. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain. In addition, the Combined Company and Inspirato’s tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting, and other laws, regulations, principles, and interpretations. The Combined Company or Inspirato may be audited in various jurisdictions, and such jurisdictions may assess additional taxes (including income taxes, sales taxes, and value added taxes) against it. Although Inspirato believes its tax estimates are reasonable, the final determination of any tax audits or litigation could differ materially from its historical tax provisions and accruals, which could have an adverse effect on the Combined Company’s and Inspirato’s results of operations or cash flows in the period or periods for which a determination is made.

Tax authorities may successfully assert that Inspirato should have collected, or in the future should collect, sales and use, value added or similar taxes, and it could be subject to substantial liabilities with respect to past or future sales, which could materially adversely affect its business, financial condition and results of operations.

Inspirato currently collects and remits applicable sales taxes and other applicable transfer taxes in jurisdictions where it, through its employees or economic activity, has a presence and where Inspirato has determined, based on applicable legal precedents, that Inspirato’s business activities are classified as taxable. Inspirato does not currently collect and remit state and local excise, utility user, or ad valorem taxes, fees, or surcharges in jurisdictions where it believes it does not have sufficient “nexus.” The application of indirect taxes, such as sales and use, value added, goods and services, business, and gross receipts taxes, to businesses that transact online, such as Inspirato’s, is a complex and evolving area. There is uncertainty as to what constitutes sufficient nexus for a state or local jurisdiction to levy taxes, fees, and surcharges on sales made over the Internet, and there is also uncertainty as to whether Inspirato’s characterization of its traveler accommodations in certain jurisdictions will be accepted by state and local tax authorities.

There are substantial ongoing costs associated with complying with the various indirect tax requirements in the numerous markets in which Inspirato conducts or may conduct business. The application of existing or future indirect tax laws, whether in the U.S. or internationally, or the failure to collect and remit such taxes, could materially adversely affect Inspirato’s business, financial condition and results of operations.

The costs and other risks associated with the Americans with Disabilities Act and similar legislation outside of the U.S. may be substantial.

Inspirato is subject to the Americans with Disabilities Act, commonly referred to as the ADA, and similar laws and regulations in certain jurisdictions outside of the U.S. These laws and regulations require public accommodations to meet certain requirements related to access and use by disabled people. Inspirato’s landlords may not have designed, constructed or implemented procedures on their properties to comply fully with the ADA or similar laws, and efforts by them or by Inspirato to achieve compliance may be costly, may delay planned openings of newly-leased properties, and could be disruptive to existing subscribers. Operators of websites or other online tools are also occasionally targeted by complaints that they have failed to make their sites sufficiently accessible. Inspirato may be required to expend substantial resources to remedy any noncompliance at its leased properties or in its app or website, or to defend against complaints of noncompliance, even if they lack merit. If Inspirato fails to comply with the requirements of the ADA or similar laws, it could be subject to fines, penalties, injunctive action, costly legal proceedings, reputational harm and other business effects that could materially and adversely affect its brand and results of operations.

 

85


Table of Contents
Index to Financial Statements

Failure to comply with consumer protection, marketing and advertising laws, including with regard to direct marketing and internet marketing practices, could result in fines or place restrictions on Inspirato’s business.

Inspirato’s business is subject to various laws and regulations governing consumer protection, advertising and marketing. Inspirato may encounter governmental and private party investigations and complaints in areas such as the clarity, accuracy and presentation of information on its website. In addition, Inspirato’s marketing activities will be subject to various laws and regulations in the U.S. and internationally that govern online and other direct marketing and advertising practices. Its marketing activities could be restricted, its subscriber relationships and revenues could be adversely affected, and its costs could increase, due to changes required in its marketing, listing or booking practices, or any investigations, complaints or other adverse developments related to these laws and regulations.

General Risk Factors

Inspirato may be subject to liability claims and its insurance may be inadequate to cover its losses.

Inspirato is subject to numerous obligations in its contracts with third parties and otherwise. Despite the procedures, systems and internal controls Inspirato has implemented to comply with its contracts and avoid or mitigate various risks, it may breach these commitments, whether through a weakness in these procedures, systems and internal controls, or because of negligence or the willful act of an employee, contractor or third party. Inspirato’s insurance policies may be inadequate to compensate it for the potentially significant losses that may result from claims arising from breaches of its contracts, disruptions in its service, including those caused by cybersecurity incidents, failures or disruptions to its infrastructure, catastrophic events and disasters or otherwise. In addition, such insurance may not be available to Inspirato in the future on economically reasonable terms, or at all. Further, the insurance may not cover all claims made against Inspirato and defending a suit, regardless of its merit, could be costly and divert management’s attention.

Inspirato’s business is subject to the risks of catastrophic events.

The occurrence of any catastrophic event, including an earthquake, fire, flood, tsunami, or other weather event, power loss, telecommunications failure, software or hardware malfunctions, epidemic or pandemic diseases (such as the ongoing COVID-19 pandemic), cyber-attack, war, or terrorist attack, could result in significant disruptions to Inspirato’s business. In addition, acts of terrorism could cause disruptions to the Internet or the economy as a whole. Although Inspirato has implemented disaster recovery arrangements, there can be no assurance that these arrangements will appropriately address all potential disaster scenarios. If Inspirato’s systems were to fail or be negatively impacted as a result of a natural disaster or other event, its business would be impaired or it could lose critical data.

Inspirato’s partners, suppliers, and subscribers are also subject to the risk of catastrophic events. In those events, Inspirato’s ability to operate its business, as well as the demand for its offerings, may be impaired as a result of factors outside its control.

Risks Related to an Investment in Securities of the Combined Company

Thayer’s Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Combined Company Common Stock as consideration in the Business Combination and the issuance of shares to the PIPE Subscribers in the PIPE. Having a minority share position may reduce the influence that our current stockholders have on the management of the Combined Company.

Upon consummation of the Business Combination, we anticipate that Flow-Through Sellers will be issued an aggregate of 72,962,085 New Common Units and shares of Combined Company Class V Common Stock. The A&R Inspirato LLCA will provide Flow-Through Sellers the right to exchange New Common Units, together with the cancellation of an equal number of Combined Company Class V Common Stock, for an equal number of

 

86


Table of Contents
Index to Financial Statements

shares of the Combined Company Class A Common Stock, subject to certain restrictions set forth therein. In addition, the Combined Company will issue PIPE Shares to the PIPE Subscribers pursuant to the PIPE simultaneously with the Closing. Based on the foregoing and the assumption that no Public Stockholders exercise their redemption rights in connection with the Business Combination, (i) our Public Stockholders will own 17,250,000 shares of Combined Company Class A Common Stock, representing approximately 13.3% of the total shares outstanding and 13.3% of the voting power of the Combined Company, (ii) our Sponsor and its affiliates and advisors will own 2,812,500 shares of Combined Company Class A Common Stock, representing approximately 2.2% of the total shares outstanding, and 2.2% of the voting power of the Combined Company, (iii) the PIPE Subscribers will own 8,950,384 shares of Combined Company Class A Common Stock, representing approximately 6.9% of the total shares outstanding and 6.9% of the voting power of the Combined Company, and (iv) the Blocker Sellers will own 72,962,085 shares of Combined Company Class A Common Stock, representing approximately 21.2% of the total shares outstanding and 21.2% of the voting power of the Combined Company. Thayer Public Stockholders may experience further dilution after the completion of the Business Combination upon the exercise of 7,491,849 Assumed Inspirato Options and 15,800,000 Thayer Warrants, including 7,175,000 Private Warrants held by the Sponsor, for an aggregate of 23,450,648 shares of Combined Company Class A Common Stock. Further, pursuant to the 2021 Plan, following the consummation of the Business Combination, the Combined Company may issue an aggregate of up to 23,353,734 shares of Combined Company Class A Common Stock, which amount may be subject to increase from time to time. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by unitholders of Inspirato in the Combined Company will be different. For additional information, please read the discussion under the headings “Summary of the Proxy Statement/Prospectus – Ownership of the Combined Company After the Closing,” “The Business Combination AgreementDescription of the Business Combination Agreement,” “Unaudited Pro Forma Condensed Combined Financial Information” and “Proposal No. 4 — The Incentive Plan Proposal” and “Inspirato’s Executive Compensation — Employee Benefit Plans.”

There may not be an active trading market for the Combined Company Class A Common Stock, which may make it difficult to sell shares of Combined Company Class A Common Stock.

It is possible that after the Business Combination, an active trading market will not develop or, if developed, that any market will not be sustained. This would make it difficult for you to sell shares of Combined Company Class A Common Stock at an attractive price or at all. The market price per share of Thayer Class A Common Stock may not be indicative of the price at which shares of Combined Company Class A Common Stock will trade in the public market after the Business Combination.

The market price of shares of the Combined Company Class A Common Stock may be volatile, which could cause the value of your investment to decline.

Even if an active trading market develops following the Business Combination, the market price of Combined Company Class A Common Stock may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. The securities markets have experienced significant volatility as a result of the COVID-19 pandemic. Market volatility, as well as general economic, market, or political conditions, could reduce the market price of shares of Combined Company Class A Common Stock regardless of its operating performance. The Combined Company’s operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including: (1) variations in quarterly operating results or dividends, if any, to stockholders, (2) additions or departures of key management personnel, (3) publication of research reports about the Inspirato’s industry, (4) litigation and government investigations, (5) changes or proposed changes in laws or regulations or differing interpretations or enforcement of laws or regulations affecting Inspirato’s business, (6) adverse market reaction to any indebtedness incurred or securities issued in the future, (7) changes in market valuations of similar companies, (8) adverse publicity or speculation in the press or investment community, (9) announcements by competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures, or capital commitments and (10) the impact of the COVID-19 pandemic on Inspirato’s management, employees, partners,

 

87


Table of Contents
Index to Financial Statements

customers, and operating results. In response, the market price of shares of Combined Company Class A Common Stock could decrease significantly. You may be unable to resell your shares of Combined Company Class A Common Stock at or above your purchase price. Following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against such company. Such litigation, if instituted against the Combined Company, could result in substantial costs and a diversion of management’s attention and resources.

The Combined Company’s ability to timely raise capital in the future may be limited, or may be unavailable on acceptable terms, if at all. The failure to raise capital when needed could harm the Combined Company’s business, operating results and financial condition. Debt or equity issued to raise additional capital may reduce the value of the Combined Company Class A Common Stock.

We and Inspirato cannot be certain when or if the operations of Inspirato will generate sufficient cash to fund its ongoing operations or the growth of its business. The Combined Company intends to make investments to support Inspirato’s current business and may require additional funds to respond to business challenges, including the need to develop new features or enhance its software, improve its operating infrastructure or acquire complementary businesses and technologies. Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, the Combined Company may be unable to invest in Inspirato’s future growth opportunities, which could harm its business, operating results and financial condition. If the Combined Company incurs debt, the debt holders could have rights senior to holders of Combined Company Class A Common Stock to make claims on the Combined Company’s assets. The terms of any debt could restrict the Combined Company’s operations, including its ability to pay dividends on Combined Company Class A Common Stock. If the Combined Company issues additional equity securities following the Closing, stockholders will experience dilution, and the new equity securities could have rights senior to those of Combined Company Class A Common Stock. Because the decision to issue securities in the future will depend on numerous considerations, including factors beyond the Combined Company’s control, the Combined Company cannot predict or estimate the amount, timing or nature of any future issuances of debt or equity securities. As a result, stockholders will bear the risk of future issuances of debt or equity securities reducing the value of their Combined Company Class A Common Stock and diluting their interest.

A small number of stockholders will continue to have substantial control over the Combined Company after this offering, which may limit other stockholders’ ability to influence corporate matters and delay or prevent a third party from acquiring control over the Combined Company.

Upon completion of the Business Combination, the directors and executive officers of the Combined Company, and beneficial owners expected to own 5% or more of its voting securities and their respective affiliates, will beneficially own, in the aggregate, approximately 30.0% of outstanding Combined Company Common Stock, assuming no Public Stockholders redeem their common stock. This significant concentration of ownership may have a negative impact on the trading price for the Combined Company Class A Common Stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. In addition, these stockholders will be able to exercise influence over all matters requiring stockholder approval, including the election of directors and approval of corporate transactions, such as a merger or other sale of the Combined Company or its assets. This concentration of ownership could limit stockholders’ ability to influence corporate matters and may have the effect of delaying or preventing a change in control, including a merger, consolidation or other business combination, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change in control would benefit the other stockholders.

There can be no assurance that the Combined Company’s securities will be approved for listing on Nasdaq or that the Combined Company will be able to comply with the continued listing standards of Nasdaq.

In connection with the Closing, we intend to list the common stock and warrants of the Combined Company on Nasdaq under the symbols “ISPO” and “ISPOW,” respectively. The Combined Company’s continued

 

88


Table of Contents
Index to Financial Statements

eligibility for listing may depend on the number of our shares that are redeemed. If, after the Business Combination, Nasdaq delists the Combined Company’s securities from trading on its exchange for failure to meet the listing standards, the Combined Company and its stockholders could face significant negative consequences including:

 

   

limited availability of market quotations for the Combined Company’s securities;

 

   

a determination that the Combined Company Class A Common Stock is a “penny stock” which will require brokers trading in the Combined Company Class A Common Stock to adhere to more stringent rules,

 

   

possible reduction in the level of trading activity in the secondary trading market for shares of the Combined Company Class A Common Stock;

 

   

a limited amount of analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

If the Combined Company’s operating and financial performance in any given period does not meet the guidance provided to the public or the expectations of investment analysts, the market price of the Combined Company Class A Common Stock may decline.

The Combined Company may, but is not obligated to, provide public guidance on its expected operating and financial results for future periods. Any such guidance will consist of forward-looking statements, subject to the risks and uncertainties described in this prospectus/proxy statement and in the Combined Company’s other public filings and public statements. The ability to provide this public guidance, and the ability to accurately forecast its results of operations, may be impacted by the COVID-19 pandemic. The Combined Company’s actual results may not always be in line with or exceed any guidance it has provided, especially in times of economic uncertainty, such as the current global economic uncertainty being experienced as a result of the COVID-19 pandemic. If, in the future, the Combined Company’s operating or financial results for a particular period do not meet any guidance provided or the expectations of investment analysts, or if the Combined Company reduces its guidance for future periods, the market price of the Combined Company Class A Common Stock may decline as well. Even if the Combined Company does issue public guidance, there can be no assurance that it will continue to do so in the future.

Following the consummation of the Business Combination, the Combined Company will incur significant increased expenses and administrative burdens as a public company, which could negatively impact its business, financial condition and results of operations.

Following the consummation of the Business Combination, the Combined Company will face increased legal, accounting, administrative and other costs and expenses as a public company that Inspirato did not incur as a private company. The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements will require the Combined Company to carry out activities Inspirato has not done previously. For example, the Combined Company will create new board committees and adopt new internal controls and disclosure controls and procedures. In addition, expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if the Combined Company identifies a material weakness or significant deficiency in the internal control over financial reporting), the Combined Company could incur additional costs rectifying those issues, and the existence of those issues could harm the Combined Company’s reputation or investor perceptions of it. It may also be more expensive to obtain director and officer liability insurance. Risks associated with the Combined Company’s status as a public company may make it more difficult to attract and retain qualified persons to serve

 

89


Table of Contents
Index to Financial Statements

on the PubCo Board or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require the Combined Company to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.

If the Combined Company is unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of financial reports, and the market price of the Combined Company Class A Common Stock.

The Combined Company will be required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. In addition, following the Business Combination, it will be required to furnish a report by management in its annual report on Form 10-K on the effectiveness of its internal control over financial reporting, pursuant to Section 404 of Sarbanes-Oxley. The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time-consuming, costly, and complicated. If the Combined Company identifies material weaknesses in its internal control over financial reporting, if it is unable to comply with the requirements of Section 404 of Sarbanes-Oxley in a timely manner, or if it is unable to assert that its internal control over financial reporting is effective, it will be unable to certify that its internal control over financial reporting is effective. The Combined Company cannot assure you that there will not be material weaknesses or significant deficiencies in its internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit the Combined Company’s ability to accurately report its financial condition or results of operations. Inspirato’s management has identified material weaknesses in its internal control over financial reporting. If the Combined Company is unable to conclude that its internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of the Combined Company’s financial reports and the market price of the Combined Company Class A Common Stock could decline. The Combined Company could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.

Thayer has no operating or financial history and its results of operations and those of the Combined Company may differ significantly from the unaudited pro forma financial data included in this proxy statement.

Thayer is a blank check company and it has no operating history and no revenues. This proxy statement/prospectus includes unaudited pro forma condensed combined financial statements for the Combined Company. The unaudited pro forma condensed combined statement of operations of the Combined Company combines our historical audited statement of operations for the period from July 31, 2020 (inception) through December 31, 2020, with the historical audited consolidated statement of operations of Inspirato for the year ended December 31, 2020, and combines our historical unaudited statement of operations for the nine months ended September 30, 2021, with the historical unaudited condensed consolidated statement of operations of Inspirato for the nine months ended September 30, 2021, respectively, and gives pro forma effect to the Business Combination as if it had been consummated on January 1, 2020. The unaudited pro forma condensed combined balance sheet of the Combined Company combines our historical unaudited balance sheet as of September 30, 2021, and the unaudited condensed consolidated balance sheet of Inspirato as of September 30, 2021, and gives pro forma effect to the Business Combination as if it had been consummated on September 30, 2021. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the Business Combination and the acquisitions by Inspirato been consummated on the dates indicated above, or the future consolidated results

 

90


Table of Contents
Index to Financial Statements

The Combined Company will qualify as an “emerging growth company”. The reduced public company reporting requirements applicable to emerging growth companies may make its common stock less attractive to investors.

Following the consummation of the Business Combination, the Combined Company will qualify as an “emerging growth company” under SEC rules. As an emerging growth company, the Combined Company will be permitted and plans to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These provisions include: (1) presenting only two years of audited financial statements, (2) presenting only two years of related selected financial data and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure, (3) an exemption from compliance with the auditor attestation requirement in the assessment of internal control over financial reporting pursuant to Section 404 of Sarbanes-Oxley, (4) not being required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, (5) reduced disclosure obligations regarding executive compensation arrangements in periodic reports, registration statements, and proxy statements, and (6) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information the Combined Company provides will be different than the information that is available with respect to other public companies that are not emerging growth companies. If some investors find the Combined Company Class A Common Stock less attractive as a result, there may be a less active trading market for the Combined Company Class A Common Stock, and the market price of the Combined Company Class A Common Stock may be more volatile. The Combined Company will remain an emerging growth company until the earliest of: (1) December 31, 2024, (2) the last day of the fiscal year in which it has gross revenue exceeding $1.07 billion, (3) the date on which it has, during the immediately preceding three-year period, issued more than $1.0 billion in non-convertible debt securities, and (4) the end of any fiscal year in which the market value of the Combined Company Class A Common Stock held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year.

Inspirato’s management has limited experience in operating a public company.

Inspirato’s executive officers have limited experience in the management of a publicly traded company. Inspirato’s management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to the management and growth of the Combined Company. Inspirato may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the U.S. The development and implementation of the standards and controls necessary for the Combined Company to achieve the level of accounting standards required of a public company in the U.S. may require costs greater than expected. It is possible that Inspirato will be required to expand its employee base and hire additional employees to support its operations as a public company, which will increase its operating costs in future periods.

If securities or industry analysts do not publish research or reports about the Combined Company’s business or publish negative reports, the market price of the Combined Company Class A Common Stock could decline.

The trading market for the Combined Company Class A Common Stock will be influenced by the research and reports that industry or securities analysts publish about the Combined Company or its business. If regular publication of research reports ceases, the Combined Company could lose visibility in the financial markets, which in turn could cause the market price or trading volume of the Combined Company Class A Common Stock to decline. Moreover, if one or more of the analysts who cover the Combined Company downgrade the Combined Company Class A Common Stock or if reporting results do not meet their expectations, the market price of the Combined Company Class A Common Stock could decline.

 

91


Table of Contents
Index to Financial Statements

If the Combined Company’s security holders exercise their registration rights, it may negatively impact the market price of the Combined Company Class A Common Stock and the existence of these rights may make it more difficult to effect a business combination.

In connection with the Closing, Thayer’s existing registration rights agreement will be amended and restated to: (i) provide that the Combined Company will file a registration statement within 15 business days following the Closing to register for resale (A) the Founder Shares and shares of Thayer Class A Common Stock issuable upon exercise of the Private Warrants held by the Sponsor and (B) the shares of the Combined Company Class A Common Stock to be issued to the Inspirato unitholders in the Business Combination; (ii) provide the Inspirato unitholders with unlimited demand registration rights; (iii) provide the Inspirato unitholders and the Sponsor with customary underwritten takedown rights (subject to customary priorities, minimums, frequency, and quantity limits, cutbacks, deferrals and other terms); and (iv) afford each of the Inspirato unitholders and the Sponsor, on a pari passu basis, “piggy back” registration rights with respect to any underwritten offerings by the other stockholders and by the Combined Company. The sale or possibility of sale of these additional securities trading in the public market may negatively impact the market price of the Combined Company’s securities.

The Combined Company has no current plans to pay cash dividends on its common stock; as a result, stockholders may not receive any return on investment unless they sell their Combined Company Class A Common Stock for a price greater than the purchase price.

The Combined Company has no current plans to pay dividends on the Combined Company Class A Common Stock. Any future determination to pay dividends will be made at the discretion of the Combined Company Board, subject to applicable laws. It will depend on a number of factors, including the Combined Company’s financial condition, results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, general business conditions, and other factors that the board of directors may deem relevant. In addition, the ability to pay cash dividends may be restricted by the terms of debt financing arrangements, as any future debt financing arrangement likely will contain terms restricting or limiting the amount of dividends that may be declared or paid on the Combined Company Class A Common Stock. As a result, stockholders may not receive any return on an investment in Combined Company Class A Common Stock unless they sell their shares for a price greater than that which they paid for them.

The Combined Company may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of the Combined Company Class A Common Stock.

Thayer Public Stockholders may experience dilution after the completion of the Business Combination upon the exercise of 7,491,849 Assumed Inspirato Options and 15,800,000 Thayer Warrants, including 7,175,000 Private Warrants held by the Sponsor, for an aggregate of 23,291,849 shares of Combined Company Class A Common Stock. Pursuant to the 2021 Plan, following the consummation of the Business Combination, the Combined Company may issue an aggregate of up to 23,353,734 shares of Combined Company Class A Common Stock, which amount may be subject to increase from time to time. For additional information about this plan, please read the discussion under the headings “Proposal No. 4 — The Incentive Plan Proposal” and “Inspirato’s Executive Compensation — Employee Benefit Plans.” The Combined Company may also issue additional shares of common stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.

The issuance of additional shares or other equity securities of equal or senior rank would have the following effects:

 

   

existing stockholders’ proportionate ownership interest in the Combined Company will decrease;

 

   

the amount of cash available per share, including for payment of dividends in the future, may decrease;

 

   

the relative voting strength of each previously outstanding common stock may be diminished; and

 

92


Table of Contents
Index to Financial Statements
   

the market price of the Combined Company Class A Common Stock may decline.

Provisions in the Combined Company’s organizational documents and certain rules imposed by regulatory authorities may delay or prevent an acquisition by a third party that could otherwise be in the interests of stockholders.

The Proposed Certificate of Incorporation and Proposed Bylaws to be in effect following the Closing will contain several provisions that may make it more difficult or expensive for a third party to acquire control of the Combined Company without the approval of the board of directors. These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or other transaction that stockholders may consider favorable, include the following:

 

   

the division of the board of directors into three classes and the election of each class for three-year terms;

 

   

advance notice requirements for stockholder proposals and director nominations;

 

   

provisions limiting stockholders’ ability to call special meetings of stockholders, to require special meetings of stockholders to be called, and to take action by written consent;

 

   

restrictions on business combinations with interested stockholders;

 

   

in certain cases, the approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal the bylaws, or amend or repeal certain provisions of the certificate of incorporation;

 

   

no cumulative voting;

 

   

the required approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote at an election of the directors to remove directors; and

 

   

the ability of the board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions.

These provisions of the Proposed Certificate of Incorporation and the Proposed Bylaws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of Combined Company Class A Common Stock in the future, which could reduce the market price of Combined Company Class A Common Stock. For more information, see the section titled “Description of Thayer’s Securities — Certain Anti-Takeover Provisions of Delaware Law.”

The provision of the Proposed Certificate of Incorporation to be in effect following the Business Combination requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the U.S. for certain types of lawsuits may have the effect of discouraging lawsuits against directors and officers.

The Proposed Certificate of Incorporation will provide that, unless the Combined Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for: (1) any derivative action or proceeding brought on behalf of the Combined Company, (2) any action asserting a claim of breach of fiduciary duty owed by any director, officer, agent or other employee or stockholder to the Combined Company or its stockholders, (3) any action asserting a claim arising pursuant to any provision of the DGCL, the Proposed Certificate of Incorporation or the Proposed Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (4) any claim or cause of action seeking to interpret, apply, enforce or determine the validity of the Proposed Certificate of Incorporation or the Proposed Bylaws or (5) any action asserting a claim governed by the internal affairs doctrine, in each case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

 

93


Table of Contents
Index to Financial Statements

This provision would not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction. In addition, to prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, the Proposed Certificate of Incorporation will provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the U.S. will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, including all causes of action asserted against any defendant named in such complaint. For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering. However, as Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, there is uncertainty as to whether a court would enforce such provision. The Proposed Certificate of Incorporation will further provide that any person or entity holding, owning or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. Investors also cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of the Proposed Certificate of Incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and we cannot assure you that the provisions will be enforced by a court in those other jurisdictions. If a court were to find either exclusive-forum provision in the Proposed Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our business.

Because the Combined Company will become a public reporting company by means other than a traditional underwritten initial public offering, the shareholders of the Combined Company may face additional risks and uncertainties.

Because the Combined Company will become a public reporting company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there is no independent third-party underwriter selling the shares of the Combined Company Class A Common Stock, and, accordingly, the stockholders of the Combined Company will not have the benefit of an independent review and investigation of the type normally performed by an unaffiliated, independent underwriter in a public securities offering. Due diligence reviews typically include an independent investigation of the background of the company, any advisors and their respective affiliates, review of the offering documents and independent analysis of the plan of business and any underlying financial assumptions. Because there is no independent third-party underwriter selling the shares of the Combined Company Class A Common Stock, Thayer stockholders must rely on the information included in this proxy statement/prospectus. Although Thayer’s management conducted a due diligence review and investigation of Inspirato in connection with the Business Combination, the lack of an independent due diligence review and investigation increases the risk of investment in the Combined Company because it may not have uncovered facts that would be important to a potential investor.

Moreover, the Public Stockholders will not benefit from possible recourse against an underwriter for material misstatements or omissions in this proxy statement/prospectus or additional roles of the underwriters in a traditional underwritten initial public offering, such as the book-building process, which helps inform efficient price discovery, and underwriter support to help stabilize the public price of the new issue immediately after

 

94


Table of Contents
Index to Financial Statements

listing. The lack of such recourse process and support in connection with the Combined Company Class A Common Stock could result in greater potential for errors, diminished investor demand, inefficiencies in pricing and a more volatile public price for the shares during the period immediately following the listing.

In addition, because the Combined Company will not become a public reporting company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or be less likely to provide, coverage of the Combined Company. Investment banks may also be less likely to agree to underwrite secondary offerings on behalf of the Combined Company than they might if the Combined Company became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with the Combined Company as a result of more limited coverage by analysts and the media. The failure to receive research coverage or support in the market for the Combined Company Class A Common Stock could have an adverse effect on the Combined Company’s ability to develop a liquid market for the Combined Company Class A Common Stock.

Risks Related to Thayer

Thayer’s executive officers, directors, the Sponsor and director nominees have agreed to vote in favor of the Business Combination, regardless of how the Public Stockholders vote.

Unlike many other blank check companies in which the executive officers, directors and other initial stockholders agree to vote their Founder Shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, Thayer’s executive officers, directors and the Sponsor have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with Thayer, to vote any shares of Thayer Capital Stock held by them in favor of the Business Combination. Thayer’s executive officers, directors and the Sponsor (and their permitted transferees) owned 20% of the issued and outstanding shares of Thayer Capital Stock as of the Record Date. As a result of such agreements, the affirmative vote of holders of an additional 6,684,375 shares of Thayer Capital Stock, representing 31% of the remaining shares of Thayer Capital Stock held by the Public Stockholders as of the Record Date, assuming the minimum number of shares required to constitute a quorum are voted at the special meeting, would be required to approve the Business Combination Proposal. Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if such persons agreed to vote their shares of Thayer Capital Stock in accordance with the majority of the votes cast by the Public Stockholders.

The exercise of Thayer’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination Agreement may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in Thayer’s stockholders’ best interest.

In the period leading up to the Closing, events may occur that, pursuant to the Business Combination Agreement, would require Thayer to agree to amend the Business Combination Agreement, to consent to certain actions taken by Inspirato or to waive rights that Thayer is entitled to under the Business Combination Agreement. Such events could arise because of changes in the course of Inspirato’s business, a request by Inspirato to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on Inspirato’s business and would entitle Thayer to terminate the Business Combination Agreement. In any of such circumstances, it would be at Thayer’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is best for Thayer and what he, she or they may believe is best for himself, herself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, Thayer does not believe there will be any material changes or waivers that Thayer’s directors and officers would be likely to make after the mailing of this proxy statement/prospectus. Thayer will circulate a new or amended proxy statement/prospectus if changes to the terms of the Business Combination that would have a material impact on its stockholders are required prior to the vote on the Business Combination Proposal.

 

95


Table of Contents
Index to Financial Statements

If Thayer is unable to complete the Business Combination or another business combination by June 15, 2022, Thayer will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against Thayer and, as a result, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by stockholders could be less than $10.00 per share.

Under the terms of the Existing Thayer Certificate of Incorporation, Thayer must complete an initial business combination by June 15, 2022, or Thayer must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against Thayer.

Although Thayer has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective business combination partners it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account could be subject to claims that could take priority over those of the Public Stockholders. If Thayer is unable to complete a business combination within the required time period, the Sponsor has agreed it will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of business combination partners or claims of vendors or other entities that are owed money by Thayer for services rendered or contracted for or products sold to Thayer. However, it may not be able to meet such obligation. Therefore, the per-share distribution from the Trust Account in such a situation may be less than $10.00 due to such claims.

Additionally, if Thayer is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if Thayer otherwise enters compulsory or court supervised liquidation, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the Trust Account, Thayer may not be able to return to its public stockholders at least $10.00 per Public Share.

For illustrative purposes, based on funds in the Trust Account of approximately $176 million on September 30, 2021, the estimated per share redemption price would have been approximately $10.20.

Thayer’s directors, executive officers, advisors or their affiliates may take actions, which may influence the vote on the Business Combination Proposal and other Stockholder Proposals and reduce the public “float” and have a depressive effect on the market price of Thayer Class A Common Stock.

At any time prior to the special meeting of stockholders during which they are not aware of any non-material public information about Thayer or its securities, Thayer’s directors, executive officers, advisors or their respective affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of the Business Combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of Thayer’s securities, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that Thayer’s directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. In addition, they may enter into transactions with investors and others to provide them with incentives to acquire shares of Thayer Class A Common Stock. The purpose of such purchases and other transactions could be

 

96


Table of Contents
Index to Financial Statements

to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination, where it appears that such requirement would otherwise not be met. This may result in the completion of the Business Combination that may not otherwise have been possible. If such purchases are made, the public “float” of Thayer Class A Common Stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of Thayer’s securities on a national securities exchange.

The Sponsor may have interests in the Business Combination different from the interests of Public Stockholders.

The Sponsor has financial interests in the Business Combination that are different from, or in addition to, those of other Public Stockholders generally. In addition, the Sponsor may be incentivized to complete the Business Combination, or an alternative initial business combination with a less favorable company or on terms less favorable to stockholders, rather than to liquidate, in which case the Sponsor would lose its entire investment. As a result, the Sponsor may have a conflict of interest in determining whether Inspirato is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination. The Thayer board of directors was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to Public Stockholders that they approve the Business Combination.

Thayer’s ability to successfully effect the Business Combination and the Combined Company’s ability to successfully operate the business thereafter will be largely dependent upon the efforts of certain key personnel of Inspirato, all of whom we expect to stay with the Combined Company following the Business Combination. The loss of such key personnel could negatively impact the operations and financial results of the combined business.

Thayer’s ability to successfully effect the Business Combination and the Combined Company’s ability to successfully operate the business following the Closing is dependent upon the efforts of certain key personnel of Inspirato. Although we expect such key personnel to remain with the Combined Company following the Business Combination, there can be no assurance that they will do so. It is possible that Inspirato will lose some key personnel, which could negatively impact the operations and profitability of the Combined Company. Furthermore, following the Closing, certain of the key personnel of Inspirato may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause the Combined Company to have to expend time and resources helping them become familiar with such requirements.

Thayer’s board of directors did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination and, as a result, the terms may not be fair from a financial point of view to the Public Stockholders.

Thayer’s board of directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination with Inspirato. In analyzing the Business Combination, Thayer’s board of directors and management conducted due diligence on Inspirato and researched the industry in which Inspirato operates and concluded that the Business Combination was in the best interest of Thayer’s stockholders. For a complete discussion of the factors utilized by Thayer’s board of directors in approving the Business Combination, see the section titled “Proposal No.1 — The Business Combination Proposal — The Business Combination — Thayer’s Board of Directors’ Reasons for the Approval of the Business Combination.” Thayer’s board of directors believes because of the financial skills and background of its directors, it was qualified to conclude that the Business Combination was fair from a financial perspective to its stockholders and that Inspirato’s fair market value was at least 80% of Thayer’s net assets (excluding any taxes payable on interest earned). Accordingly, investors will be relying solely on the judgment of Thayer’s board of directors in valuing Inspirato’s business, and the board of directors may not have properly valued such business. Thayer’s board of directors may be incorrect in its assessment of the Business Combination. The lack of a third-party valuation or

 

97


Table of Contents
Index to Financial Statements

fairness opinion may also lead an increased number of stockholders to vote against the proposed Business Combination or demand redemption of their shares for cash, which could potentially adversely impact Thayer’s ability to consummate the Business Combination.

Unlike many blank check companies, Thayer does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it easier for Thayer to consummate the Business Combination even if a substantial majority of Thayer’s stockholders do not agree.

Since Thayer has no specified percentage threshold for redemption contained in the Existing Thayer Certificate of Incorporation, its structure is different in this respect from the structure used by many blank check companies. Historically, blank check companies would not be able to consummate an initial business combination if the holders of such company’s public shares voted against a proposed business combination and elected to redeem more than a specified maximum percentage of the shares sold in such company’s initial public offering, which percentage threshold was typically between 19.99% and 39.99%. As a result, many blank check companies were unable to complete a business combination because the number of shares voted by their Public Stockholders electing redemption exceeded the maximum redemption threshold pursuant to which such company could proceed with its initial business combination. As a result, Thayer may be able to consummate the Business Combination even if a substantial majority of the Public Stockholders do not agree with the Business Combination and have redeemed their shares. However, in no event will Thayer redeem Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon the consummation of the Business Combination. If enough Public Stockholders exercise their redemption rights such that Thayer cannot satisfy the net tangible asset requirement, Thayer would not proceed with the redemption of our Public Shares and the Business Combination, and instead may search for an alternate business combination.

Public Stockholders will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate their investment, therefore, Public Stockholders may be forced to sell their securities, potentially at a loss.

Public Stockholders shall be entitled to receive funds from the Trust Account only (i) in the event of a redemption to Public Stockholders prior to any winding up in the event Thayer does not consummate its initial business combination or its liquidation, (ii) if they redeem their shares in connection with an initial business combination that Thayer consummates or (iii) if they redeem their shares in connection with a stockholder vote to amend the Existing Thayer Certificate of Incorporation (A) to modify the substance or timing of Thayer’s obligation to redeem 100% of the Public Shares if Thayer does not complete its initial business combination within 24 months from the closing of the IPO or (B) with respect to any other provision relating to Thayer’s pre-business combination activity and related stockholders’ rights. In no other circumstances will a stockholder have any right or interest of any kind to the funds in the Trust Account. Accordingly, to liquidate their investment, the Public Stockholders may be forced to sell their securities, potentially at a loss.

If third parties bring claims against Thayer, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share.

Thayer’s placing of funds in the Trust Account may not protect those funds from third-party claims against Thayer. Although Thayer has sought to have all vendors, service providers (other than its independent registered public accounting firm), prospective business combination partners or other entities with which it does business execute agreements with Thayer waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of the Public Stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case, in order to gain advantage with respect to a claim against Thayer’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, Thayer’s management will

 

98


Table of Contents
Index to Financial Statements

perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to Thayer than any alternative.

Examples of possible instances where Thayer may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where Thayer is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if Thayer is unable to complete its initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with its initial business combination, Thayer will be required to provide for payment of claims of creditors that were not waived that may be brought against Thayer within the 10 years following redemption. Accordingly, the per share redemption amount received by Public Stockholders could be less than the $10.00 per share initially held in the Trust Account, due to claims of such creditors.

Our Sponsor has agreed that it will be liable to Thayer if and to the extent any claims by a third party (other than Thayer’s independent registered public accounting firm) for services rendered or products sold to us, or a prospective business combination partner with which Thayer has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below $10.00 per Public Share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under Thayer’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not be responsible to the extent of any liability for such third-party claims. Thayer has not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and, therefore, our Sponsor may not be able to satisfy those obligations. Thayer has not asked our Sponsor to reserve for such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for Thayer’s initial business combination and redemptions could be reduced to less than $10.00 per Public Share. In such event, Thayer may not be able to complete its initial business combination, and its stockholders would receive such lesser amount per share in connection with any redemption of their Public Shares. None of Thayer’s officers or directors will indemnify Thayer for claims by third parties including, without limitation, claims by vendors and prospective business combination partners.

Thayer’s directors may decide not to enforce indemnification obligations against our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to the Public Stockholders.

In the event that the proceeds in the Trust Account are reduced below $10.00 per Public Share and our Sponsor asserts that it is unable to satisfy obligations or that it has no indemnification obligations related to a particular claim, Thayer’s independent directors would determine on Thayer’s behalf whether to take legal action against our Sponsor to enforce its indemnification obligations. While Thayer currently expects that its independent directors would take legal action on Thayer’s behalf against our Sponsor to enforce its indemnification obligations to Thayer, it is possible that Thayer’s independent directors in exercising their business judgment may choose not to do so in any particular instance. If Thayer’s independent directors choose not to enforce these indemnification obligations on Thayer’s behalf, the amount of funds in the Trust Account available for distribution to the Public Stockholders may be reduced below $10.00 per Public Share.

Thayer’s stockholders may be held liable for claims by third parties against Thayer to the extent of distributions received by them.

The Existing Thayer Certificate of Incorporation provides that Thayer will continue in existence only until 18 months from the closing of its IPO, or June 15, 2022. If Thayer has not completed an initial business

 

99


Table of Contents
Index to Financial Statements

combination by such date, it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any interest not previously released to Thayer but net of income taxes or any other taxes payable, divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Thayer’s remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Thayer cannot assure you that it will properly assess all claims that may be potentially brought against it. As such, Thayer’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, Thayer cannot assure you that third parties will not seek to recover from Thayer’s stockholders amounts owed to such third parties by Thayer.

If Thayer is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against Thayer which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/ creditor and/ or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Thayer’s stockholders. Furthermore, because Thayer intends to distribute the proceeds held in the Trust Account to the Public Stockholders promptly after expiration of the time Thayer has to complete an initial business combination, this may be viewed or interpreted as giving preference to the Public Stockholders over any potential creditors with respect to access to or distributions from Thayer’s assets. Furthermore, Thayer’s board of directors may be viewed as having breached their fiduciary duties to Thayer’s creditors and/or may have acted in bad faith, and thereby exposing itself and Thayer to claims of punitive damages, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors. Thayer cannot assure you that claims will not be brought against Thayer for these reasons.

Thayer’s executive officers and directors have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other Stockholder Proposals described in this proxy statement/prospectus.

When considering Thayer’s board of directors’ recommendation that our stockholders vote in favor of the approval of the Business Combination Proposal and the other Stockholder Proposals, Thayer’s stockholders should be aware that Thayer’s directors and executive officers have interests in the Business Combination that may be different from, in addition to, or in conflict with the interests of Thayer’s stockholders. These interests include:

 

   

While the Sponsor does not have any ownership in Inspirato directly, the Sponsor and Thayer’s board of directors and officers beneficially own an aggregate of 2,812,500 Founder Shares (after giving effect to the agreed upon forfeiture of 1.5 million Founder Shares upon the consummation of the Business Combination), which shares would become worthless if Thayer does not complete a business combination within the applicable time period, as the Founder Shares are not entitled to participate in any redemption or liquidation of the Trust Account. The Sponsor did not receive any compensation in exchange for this agreement to waive its redemption rights. Such shares have an aggregate market value of approximately $28.575 million based on the closing price of Thayer Class A Common Stock of $10.16 on Nasdaq on December 21, 2022, the Record Date for the special meeting of stockholders. Based on such market value, Thayer’s board of directors and officers will have an unrealized gain of approximately $28.4 million on their Thayer securities;

 

   

The Sponsor paid an aggregate of $25,000 ($0.0049 per share) for the Founder Shares which (to the extent not forfeited pursuant to the terms of the Sponsor Side Letter) will have a significantly higher value at the time of the Business Combination, if it is consummated. If Thayer does not consummate the Business Combination or another initial business combination by June 15, 2022, and Thayer is therefore required to be liquidated, these shares would be worthless, as Founder Shares are not entitled

 

100


Table of Contents
Index to Financial Statements
 

to participate in any redemption or liquidation of the Trust Account. Based on the difference in the purchase price of $0.0049 that the Sponsor paid for the Founder Shares, as compared to the purchase price of $10.00 per Unit sold in the IPO, the Sponsor may earn a positive rate of return even if the share price of the Combined Company after the Closing falls below the price initially paid for the Units in the IPO and the Public Stockholders experience a negative rate of return following the Closing of the Business Combination;

 

   

The Sponsor paid $7,175,000 for its Private Warrants, which would be worthless if a business combination is not consummated by June 15, 2022;

 

   

The Sponsor and Thayer’s directors and officers may be incentivized to complete the Business Combination, or an alternative initial business combination with a less favorable company or on terms less favorable to stockholders, rather than to liquidate, in which case the Sponsor and Thayer’s directors and officers would lose their entire investment. As a result, the Sponsor as well as Thayer’s directors or officers may have a conflict of interest in determining whether Inspirato is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination. The Thayer board of directors was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to Public Stockholders that they approve the Business Combination;

 

   

Thayer’s board of directors will not receive reimbursement for any out-of-pocket expenses incurred by them on Thayer’s behalf incident to identifying, investigating and consummating the Business Combination to the extent such expenses exceed the amount required to be retained in the Trust Account, unless the Business Combination is consummated;

 

   

The Sponsor and certain other holders of Thayer Class B Common Stock have agreed not to redeem any public shares held by them in connection with a stockholder vote to approve a proposed initial business combination;

 

   

The Sponsor and certain other holders of Thayer Class B Common Stock have entered into the Sponsor Side Letter pursuant to which such holders have already agreed to vote their shares in favor of the Business Combination with Inspirato;

 

   

The Registration Rights Agreement will be entered into by the Sponsor;

 

   

The anticipated continuation of Chris Hemmeter as a director of the Combined Company; and

 

   

The continued indemnification of the current directors and officers of Thayer following the Business Combination and the continuation of directors’ and officers’ liability insurance following the Business Combination.

These financial interests may have influenced the decision of Thayer’s directors to approve the Business Combination and to continue to pursue such Business Combination. In considering the recommendations of Thayer’s board of directors to vote for the Business Combination Proposal and other Stockholder Proposals, its stockholders should consider these interests.

We may amend the terms of the Thayer Warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority of the then-outstanding Public Warrants.

The Thayer Warrants were issued in registered form under the Thayer Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The Thayer Warrant Agreement provides that the terms of the Thayer Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision but requires the approval by the holders of at least a majority of the then outstanding Public Warrants prior to the Business Combination (or at least a majority of the then outstanding Thayer Warrants after the Business Combination) to make any change that adversely affects the interests of the registered holders.

 

101


Table of Contents
Index to Financial Statements

Accordingly, we may amend the terms of the Thayer Warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding Public Warrants prior to the Business Combination (or at least a majority of the then outstanding Thayer Warrants after the Business Combination) approve of such amendment. Although our ability to amend the terms of the Thayer Warrants with the consent of at least a majority of the then outstanding Public Warrants prior to the Business Combination (or at least a majority of the then outstanding Thayer Warrants after the Business Combination) is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Thayer Warrants, convert the Thayer Warrants into stock or cash, shorten the exercise period or decrease the number of warrant shares issuable upon exercise of an Thayer Warrant.

The Combined Company may redeem your unexpired Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Public Warrants worthless.

The Combined Company will have the ability to redeem outstanding Public Warrants (excluding the private warrants and any warrants issued to the Sponsor, officers or directors in payment of working capital loans made to us) at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the Thayer Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within a 30 trading-day period commencing at any time after the warrants become exercisable and ending on the third business day prior to proper notice of such redemption provided that on the date we give notice of redemption and during the entire period thereafter until the time the Combined Company redeems the Public Warrants, the Combined Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the Public Warrants become redeemable by the Combined Company, the Combined Company may not exercise its redemption right if it is unable to register or qualify the component securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you (i) to exercise your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of your Public Warrants. None of the Private Warrants will be redeemable by us so long as they are held by the initial purchasers or their permitted transferees.

We will require Public Stockholders who wish to redeem their Public Shares in connection with the Business Combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

We will require the Public Stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent up to two business days prior to the vote on the proposal to approve the Business Combination, or to deliver their shares to the transfer agent electronically using DTC’s Deposit/Withdrawal At Custodian System (the “DWAC System”), at the holder’s option. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent.

However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Under the Existing Thayer Bylaws, we are required to provide at least 10 days advance notice of any stockholder meeting, which would be the minimum amount of time a stockholder would have to determine whether to exercise redemption rights. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable

 

102


Table of Contents
Index to Financial Statements

to redeem their shares. In the event that a stockholder fails to comply with the various procedures that must be complied with in order to validly tender or redeem Public Shares, its shares may not be redeemed.

Additionally, despite our compliance with the proxy rules, stockholders may not become aware of the opportunity to redeem their shares.

We may issue additional shares of common stock or preferred shares under an employee incentive plan upon or after consummation of the Business Combination, which would dilute the interest of our stockholders.

The Existing Thayer Certificate of Incorporation authorizes the issuance of 110,000,000 shares of common stock, consisting of 100,000,000 shares of Thayer Class A Common Stock and 10,000,000 shares of Thayer Class B Common Stock, and 1,000,000 shares of preferred stock, in each case, par value $0.0001 per share. Pursuant to the 2021 Plan, following the consummation of the Business Combination, the Combined Company may issue an aggregate of up to 23,353,734 shares of Combined Company Class A Common Stock, which amount may be subject to increase from time to time. For additional information about this plan, please read the discussion under the headings “Proposal No. 4 — The Incentive Plan Proposal” and “Inspirato’s Executive Compensation — Employee Benefit Plans.” However, the Existing Thayer Certificate of Incorporation provides that we may not issue any additional shares of capital stock that would entitle the holders thereof to receive funds from the Trust Account or vote on an initial business combination. Although no such issuance will affect the per share amount available for redemption from the Trust Account, the issuance of additional common stock or preferred shares:

 

   

May significantly dilute the equity interest of investors from the IPO, who will not have preemptive rights in respect of such an issuance;

 

   

May subordinate the rights of holders of shares of common stock if one or more classes of preferred stock are created, and such shares of preferred stock are issued with rights senior to those afforded to Thayer Class A Common Stock;

 

   

Could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our NOL carryforwards, if any, and could result in the resignation or removal of our present officers and directors; and

 

   

May adversely affect prevailing market prices for our Thayer Class A Common Stock and/or Thayer Warrants.

The Existing Thayer Certificate of Incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with Thayer or its directors, officers, employees or stockholders.

The Existing Thayer Certificate of Incorporation requires, to the fullest extent permitted by law, that derivative actions brought in Thayer’s name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of Thayer capital stock shall be deemed to have notice of and consented to the forum provisions in the Existing Thayer Certificate of Incorporation.

 

103


Table of Contents
Index to Financial Statements

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Thayer or any of its directors, officers or employees, which may discourage lawsuits with respect to such claims, although Thayer’s stockholders will not be deemed to have waive Thayer’s compliance with federal securities laws and the rules and regulations thereunder and may therefore bring a claim in another appropriate forum. Thayer cannot be certain that a court will decide that this provision is either applicable or enforceable, and if a court were to find the choice of forum provision contained in the Existing Thayer Certificate of Incorporation to be inapplicable or unenforceable in an action, Thayer may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

The Existing Thayer Certificate of Incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. The proposal to amend and restate the Existing Thayer Certificate of Incorporation will also include this provision.

Risks if the Adjournment Proposal is Not Approved

If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination, Thayer’s board of directors will not have the ability to adjourn the special meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be completed.

Thayer’s board of directors is seeking approval to adjourn the special meeting to a later date or dates if, at the special meeting, Thayer is unable to consummate the Business Combination. If the Adjournment Proposal is not approved, Thayer’s board of directors will not have the ability to adjourn the special meeting to a later date and, therefore, the Business Combination would not be completed.

 

104


Table of Contents
Index to Financial Statements

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information is prepared in accordance with Article 11 of Regulation S-X and presents the combination of the historical financial information of Thayer and Inspirato adjusted to give effect to the Business Combination, PIPE Investment and the other related events contemplated by the Business Combination Agreement (the “Transactions”). Unless otherwise indicated or the context otherwise requires, references to the “Combined Company” refer to Inspirato and its consolidated subsidiaries after giving effect to the Transactions. Defined terms included below shall have the same meaning as terms defined and included elsewhere in this proxy statement/prospectus.

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 gives pro forma effect to the Transactions as if they were consummated on September 30, 2021. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 give pro forma effect to the Transactions as if they were consummated on January 1, 2020.

The assumptions and estimates underlying the unaudited adjustments to the unaudited pro forma condensed combined financial statements are described in the accompanying notes, which should be read in conjunction with, the following:

 

   

Thayer’s unaudited condensed financial statements and related notes as of and for the nine months ended September 30, 2021 included in the proxy statement/prospectus.

 

   

Inspirato’s unaudited financial statements and related notes as of and for the nine months ended September 30, 2021 included in the proxy statement/prospectus.

 

   

Thayer’s audited financial statements and related notes as of December 31, 2020 and for the period from July 31, 2020 (inception) through December 31, 2020 included in the proxy statement/prospectus.

 

   

Inspirato’s audited financial statements and related notes as of and for the year ended December 31, 2020 included in the proxy statement/prospectus.

 

   

Thayer’s Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the proxy statement/prospectus.

 

   

Inspirato’s Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the proxy statement/prospectus.

Certain direct and incremental costs related to the Business Combination will be recorded as a reduction against additional-paid-in-capital, consistent with the accounting for reverse recapitalizations. The unaudited pro forma condensed combined financial statements do not give effect to any anticipated synergies, operating efficiencies or cost savings that may be associated with the Business Combination.

The unaudited condensed combined pro forma adjustments reflecting the consummation of the Business Combination and related transactions are based on certain estimates and assumptions. These estimates and assumptions are based on information available as of the dates of these unaudited pro forma condensed combined financial statements and may be revised as additional information becomes available. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material.

The following describes the above entities:

Thayer

Thayer is a blank check company formed under the laws of the State of Delaware on July 31, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar

 

105


Table of Contents
Index to Financial Statements

business combination with one or more businesses, or initial business combination. Thayer has generated no operating revenues to date and does not expect to generate operating revenues until the consummation of an initial business combination.

Inspirato

Inspirato is a subscription-based luxury travel company that provides unique solutions for (i) affluent travelers seeking superior service and certainty across a wide variety of accommodations and experiences and (ii) hospitality suppliers who want to solve pain points that include monetizing excess inventory and efficiently outsourcing the hassle involved in managing rental properties.

For travelers, Inspirato offers access to a diverse portfolio of curated luxury vacation options that, as of September 30, 2021, included over 400 private luxury vacation homes available exclusively to its subscribers, and accommodations at over 430 luxury hotel and resort partners in more than 235 destinations around the world. Inspirato’s portfolio also includes Inspirato Only, featuring one-of-a-kind luxury safaris, cruises, and other experiences, and Bespoke, which offers custom-designed “bucket list” itineraries. Every Inspirato trip comes with Inspirato’s personalized service envelope — including pre-trip planning, on-site concierge, and daily housekeeping – designed to meet the needs of affluent travelers and drive exceptional customer satisfaction.

Description of the Business Combination

On June 30, 2021, Thayer, Merger Subs, Blockers and Inspirato entered into the Business Combination Agreement, pursuant to which Thayer will acquire certain of the outstanding equity interests of Inspirato. The Business Combination Agreement and the transactions contemplated thereby were unanimously approved by Thayer’s board of directors, Inspirato’s board of managers, and the governing bodies of each of the Merger Subs.

Prior to the Closing, the units representing equity interests in Inspirato are held by (i) Blockers, which are corporations (or entities treated as corporations for U.S. federal tax purposes) that are affiliated with certain institutional investors, and (ii) other Members of Inspirato, which consist of entities and individuals, including members of management and other employees of Inspirato or its subsidiaries.

The Business Combination Agreement provides for, among other things, the following:

 

   

each Blocker will merge with and into a Blocker Merger Sub (including any Non-Party Blocker, if any, that signs a joinder to the Business Combination Agreement with the consent of Inspirato) with the respective Blocker Merger Sub surviving as a wholly owned subsidiary of Thayer (collectively, the “Blocker Mergers”), resulting in the equity interests of each Blocker being cancelled and converted into the right to receive (i) shares of Combined Company Class A Common Stock based on such Blocker’s pro rata ownership of Inspirato (adjusted upward for cash and cash equivalents of such Blocker and adjusted downward for debt and transaction expenses of such Blocker), plus (ii) cash, if any, based on such Blocker’s pro rata ownership, plus (iii) certain rights under the Tax Receivable Agreement;

 

   

immediately following the Blocker Mergers, the Company Merger Sub will merge with and into Inspirato, with Inspirato continuing as the surviving company and subsidiary of Thayer, resulting in (i) each outstanding Inspirato Unit (other than any units held by the Combined Company or any of its subsidiaries following the Blocker Mergers) being cancelled and converted into a right to receive (A) New Common Units of Inspirato, (B) cash, if any, (C) shares of Combined Company Class V Common Stock and (D) certain rights under the Tax Receivable Agreement; and (ii) each outstanding Inspirato Option being automatically converted into an Assumed Inspirato Option; and

 

   

the limited liability company agreement of Inspirato will be amended and restated to, among other things, reflect the Company Merger and create a seven-person board of managers designated by PubCo and the other members holding outstanding vested New Common Units.

 

106


Table of Contents
Index to Financial Statements

Following the completion of the Business Combination, as described above, our organizational structure will be what is commonly referred to as an umbrella partnership corporation (or UP-C) structure, which is often used by entities classified as a partnership for U.S. federal income tax purposes, such as Inspirato, undertaking an initial public offering, an initial business combination with a SPAC or other going-public transactions. This UP-C structure will allow the Flow-Through Sellers to retain their equity ownership in Inspirato in the form of New Common Units issued pursuant to the Business Combination. Each Flow-Through Seller will also hold a number of shares of Combined Company Class V Common Stock equal to the number of New Common Units held by such Flow-Through Seller, which will have no economic value, but which will entitle the holder thereof to one (1) vote per share at any meeting of the stockholders of PubCo. Those institutional investors in Inspirato who, prior to the Business Combination, held Inspirato Units through a Blocker will, by contrast, hold their equity ownership in PubCo in the form of Combined Company Class A Common Stock. The parties agreed to structure the Business Combination in this manner to permit the Flow-Through Sellers to continue to realize the tax benefits associated with their ownership in an entity that is treated as a partnership for U.S. federal income tax purposes and PubCo, as a holder of New Common Units, will realize the same tax benefits. The UP-C structure also provides potential future tax benefits to PubCo (85% of which PubCo will give up and pay to the Flow-Through Sellers pro rata based on their ownership of New Common Units pursuant to the Tax Receivable Agreement), which are expected to arise when the Flow-Through Sellers ultimately exchange their New Common Units and Combined Company Class V Common Stock for shares of Combined Company Class A Common Stock. Because the New Common Units are issued by Inspirato and not PubCo, the New Common Units could be entitled to different after-tax economics on a per unit basis compared to the Combined Company Class A Common Stock on a per share basis (for example, as a result of PubCo being subject to corporate income tax, and the potential that holder of New Common Units will receive distributions, including tax distributions, directly from Inspirato but PubCo may not make corresponding distributions to the holders of Combined Company Class A Common Stock). See the section entitled “Risk Factors — Risks Related to Our Organizational Structure” for additional information on our organizational structure, including the Tax Receivable Agreement.

For more information about the Business Combination Agreement, see the section titled “The Business Combination Agreement.”

Accounting Treatment of the Business Combination

The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Thayer will be treated as the “acquired” company for accounting purposes. This determination is primarily based on the fact that subsequent to the Business Combination, the unitholders of Inspirato will have a majority of the voting power of the Combined Company, Inspirato’s operations will comprise all of the ongoing operations of the Combined Company, and Inspirato will comprise a majority of the governing body of the Combined Company. Following the Transaction, Inspirato will be managed by a seven-person board of managers designated by PubCo and the other members holding outstanding vested New Common Units. Accordingly, the financial statements will reflect the net assets of Thayer and Inspirato at historical cost with no goodwill or other intangible assets recognized.

Basis of Pro Forma Presentation

In accordance with Article 11 of Regulation S-X, pro forma adjustments to the combined historical financial information of Thayer and Inspirato give effect to transaction accounting adjustments that (1) depict in the pro forma condensed combined balance sheet, the accounting for the Transactions required by GAAP, and (2) depict in the pro forma condensed combined statement of operations, the effects of the pro forma balance sheet adjustments, assuming those adjustments were made as of the beginning of the fiscal year presented. The pro forma condensed combined financial information does not give effect to any management adjustments or any synergies, operating efficiencies, or other benefits that may result from consummation of the Transactions. In addition, as (i) Thayer and Inspirato have not had any historical relationship prior to the Transactions and (ii) there is no historical activity with respect to Merger Subs, preparation of the accompanying pro forma financial information did not require any adjustments with respect to such activities.

 

107


Table of Contents
Index to Financial Statements

Management has made significant estimates and assumptions in its determination of the pro forma adjustments based on information available as of the date of this proxy statement/prospectus/consent solicitation statement. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented as additional information becomes available. Management considers this basis of presentation to be reasonable under the circumstances.

The unaudited pro forma condensed combined financial information has been presented to provide relevant information necessary for an understanding of the Combined Company subsequent to completion of the Transactions. Accordingly, the unaudited pro forma condensed combined financial information includes, among other things, pro forma adjustments to reflect the completion of the Business Combination, the PIPE Investment, the settlement of transaction costs that have been reported in the companies’ historical financial statements or will be incurred upon consummation of the Business Combination, and the impact of certain other associated pro forma adjustments necessary to give full effect to the Transactions.

Pursuant to the Existing Thayer Certificate of Incorporation, Thayer is providing the holders of shares of Thayer Class A Common Stock originally sold as part of the Thayer Units issued in Thayer’s IPO with the opportunity to redeem, upon the Closing, the Public Shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit as of two business days prior to the Closing, in the Trust Account that holds the proceeds (including interest not previously released to Thayer to pay its income taxes or any other taxes payable) from the IPO.

Due to the redemption rights held by Thayer’s public stockholders, the unaudited pro forma condensed combined financial information have been prepared assuming two alternative levels of redemptions of Thayer’s publicly traded shares:

 

   

Assuming no redemptions: This presentation assumes that no Thayer stockholders exercise redemption rights with respect to their Public Shares upon consummation of the Business Combination; and

 

   

Assuming maximum redemption of Thayer Class A Common Stock for cash: This presentation assumes that Thayer stockholders exercise their redemption rights with respect to a maximum of 12.5 million Public Shares upon consummation of the Business Combination. The maximum number of shares subject to redemption was derived from the condition in Business Combination Agreement requiring that the Transactions result in a minimum of $140 million cash proceeds from (i) Thayer (inclusive of cash available to be released from the Trust Account) and (ii) the PIPE Investment, after giving effect to the payments to redeeming stockholders. Scenario 2 gives effect to all pro forma adjustments contained in Scenario 1, as well as additional adjustments to reflect the effect of the maximum redemption.

The following table provides a pro forma summary of the shares of the Combined Company’s common stock that would be outstanding under each of the two redemption scenarios if the Transactions had occurred on December 28, 2021 (in thousands):

 

     Assuming no redemption     Assuming max redemption  
             Shares                      %                     Shares                      %          

Thayer public shareholders

     17,250        14     4,701        4

Thayer Class B

     2,813        3     2,813        3
  

 

 

    

 

 

   

 

 

    

 

 

 

Total Thayer

     20,063        17     7,514        7

PIPE

     8,950        7     8,950        8

Inspirato LLC unitholders

     91,597        76     91,597        85
  

 

 

    

 

 

   

 

 

    

 

 

 

Total Shares at Closing

     120,610        100     108,061        100
  

 

 

    

 

 

   

 

 

    

 

 

 

 

108


Table of Contents
Index to Financial Statements

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2021

(in thousands except per share amounts)

 

    Thayer
(Historical)
    Inspirato
LLC

(Historical)
    Pro Forma
Adjustments
          Combined
Pro Forma
(Assuming
no
redemption)
    Additional
Pro Forma
Adjustments
(Assuming
Max
Redemption)
        Combined
Pro Forma
(Assuming Max
Redemption)
 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 396     $ 78,855     $ 175,988       2a     $ 308,743     $ (125,492   2h   $ 183,251  
        89,504       2b          
        (6,900     2d          
        (29,100     2e          

Restricted cash

    —         2,960       —           2,960       —           2,960  

Accounts receivable, net

    —         3,140       —           3,140       —           3,140  

Prepaid expenses

    258       6,335       —           6,593       —           6,593  

Prepaid subscriber travel

    —         15,660       —           15,660       —           15,660  

Accounts receivable, related parties

    —         762       —           762       —           762  

Other current assets

    —         832       —           832       —           832  

Deferred tax asset

    —         —         —         2i       —         —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total current assets

    654       108,544       229,492         338,690       (125,492       213,198  

Cash and marketable securities held in Trust Account

    175,988       —         (175,988     2a       —         —           —    

Property and equipment, net

    —         8,490       —           8,490       —           8,490  

Goodwill

    —         21,233       —           21,233       —           21,233  

Other long-term, assets

    —         1,073       —           1,073       —           1,073  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total assets

  $ 176,642     $ 139,340     $ 53,504       $ 369,486     $ (125,492     $ 243,994  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Liabilities and shareholders’ equity

               

Current liabilities:

               

Accounts payable

  $ 509     $ 28,390         $ 28,899         $ 28,899  

Accrued liabilities

    72       5,330           5,402           5,402  

Franchise tax payable

    174       —             174           174  

Deferred revenue

    —         155,488           155,488           155,488  

Deferred rent

    —         900           900           900  

Debt

    —         13,267           13,267           13,267  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total current liabilities

    755       203,375       —           204,130       —           204,130  

Deferred underwriting fee payable

    6,900       —         (6,900     2d       —             —    

Debt

    —         —             —             —    

Deferred revenue

    —         17,847           17,847           17,847  

Deferred rent

    —         7,828           7,828           7,828  

Warrants

    18,170       548           18,718           18,718  

Tax receivable agreement liability

    —         —         —         2j       —             —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total liabilities

    25,825       229,598       (6,900 )        248,523       —           248,523  

Series A-1

    $ 13,108       (13,108     2g     $ —           $ —    

Series A-2

      5,489       (5,489     2g       —             —    

Series B

      19,860       (19,860     2g       —             —    

 

109


Table of Contents
Index to Financial Statements
    Thayer
(Historical)
    Inspirato
LLC

(Historical)
    Pro Forma
Adjustments
          Combined
Pro Forma
(Assuming
no
redemption)
    Additional
Pro Forma
Adjustments
(Assuming
Max
Redemption)
        Combined
Pro Forma
(Assuming
Max
Redemption)
 

Series B-1

      15,282       (15,282     2g       —             —    

Series D

      20,125       (20,125     2g       —             —    

Series E

      9,916       (9,916     2g       —             —    

Thayer Class A Common stock: 17,250,000 shares subject to possible redemption at $10.20 per share

    175,950       —         (175,950     2a       —         —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total temporary equity

    175,950       83,780       (259,730       —         —           —    

Preferred stock, $0.0001 par value; 1,000 shares authorized; none issued and outstanding

    —         —         —           —             —    

Noncontrolling interest

    —         —         64,315       2k       64,315       (67,002   2k     (2,688

Combined Company Class A common