United States securities and exchange commission logo





                             October 11, 2022

       Gregory Monahan
       Chief Executive Officer
       LEGATO MERGER CORP. II
       777 Third Avenue, 37th Floor
       New York, New York 10017

                                                        Re: LEGATO MERGER CORP.
II
                                                            Registration
Statement on Form S-4
                                                            Filed September 13,
2022
                                                            File No. 333-267393

       Dear Gregory Monahan:

              We have reviewed your registration statement and have the
following comments. In
       some of our comments, we may ask you to provide us with information so
we may better
       understand your disclosure.

              Please respond to this letter by amending your registration
statement and providing the
       requested information. If you do not believe our comments apply to your
facts and
       circumstances or do not believe an amendment is appropriate, please tell
us why in your
       response.

              After reviewing any amendment to your registration statement and
the information you
       provide in response to these comments, we may have additional comments.

       Registration Statement on Form S-4 filed September 13, 2022

       Questions and Answers About the Business Combination and Annual Meeting
       Do Any of Legato II's Directors or Officers Have Interest in the
Business Combination ..., page 5

   1.                                                   Please revise to
indicate the amount of common stock and private placement units held by
                                                        the executive officers,
directors and their affiliates.
       Legato II's Directors and Executive Officers Have Financial Interests in
the Business
       Combination, page 14

   2.                                                   Please quantify the
aggregate dollar amount and describe the nature of what Legato II's
                                                        sponsor and its
affiliates have at risk that depends on the completion of a business
                                                        combination. Include
the current value of securities held, loans extended, fees due, and
                                                        out-of-pocket expenses
for which the sponsor and its affiliates are awaiting
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 2 11, 2022 Page 2
FirstName LastName
         reimbursement. Provide similar disclosure for Legato II's officers and
directors.
Redemption Rights, page 14

3.       Please indicate the number of warrants that remain outstanding. Also
quantify the value
         of warrants, based on recent trading prices, that may be retained by
redeeming
         stockholders assuming maximum redemptions.
Underwriting Fees as a Percentage of IPO Proceeds Net of Redemptions, page 15

4.       Please revise your tabular disclosures on pages 15 and 16 to include
an interim
         redemption level.
Sensitivity Analysis, page 16

5.       Please revise to disclose all possible sources and extent of dilution
that shareholders who
         elect not to redeem their shares may experience in connection with the
business
         combination. Provide disclosure of the impact of each significant
source of
         dilution, including the amount of equity held by founders, convertible
securities, including
         warrants retained by redeeming shareholders, at each of the redemption
levels detailed in
         your sensitivity analysis, including any needed assumptions. In
addition, please revise to
         include an interim redemption level.
Summary Unaudited Pro Forma Condensed Combined Financial Information, page 22

6.       It appears that your Net Income (loss) attributable to common unit
holders or shareholders
         on a Pro Forma Combined basis for both the No Redemption and Maximum
Redemption
         scenarios of $5,119 do not agree with the $4,991 of Net Income
disclosed in
         your Unaudited Pro Forma Condensed Combined Statement of Operations
for the Six Mo
         nths Ended June 30, 2022 disclosed on page 56. Please revise or
advise.
7.       It appears that your disclosures on page 23 related to Total Current
Assets, Total Assets
         and Total Shareholder's Equity for both the No Redemption Scenarios do
not agree with
         the amounts reflected in your Unaudited Pro Forma Condensed Combined
Financial
         Statements as of June 30, 2022 disclosed on page 55. In addition it
does not appear that
         your Total Liabilities amount in the Maximum Scenario as of June 30,
2022 is the same as
         what is disclosed in such statements on page 55. Please revise or
advise.
8.       We note your disclosure that Total Unaudited Pro Forma Shareholder's
Equity and Book
         Value Per Share of Legato II as if the Merger were consummated on June
30, 2022 were
         $566,017 and $8.12 per share in the No Redemption Scenario and
$285,559 and $6.78 per
         share in the Maximum Redemption Scenario. Based on your disclosures in
         your Unaudited Pro Forma Condensed Combined Financial Statements on
page 55, your
         total pro forma combined stockholder's equity is $506,357 and $225,899
in the No
         Redemption and Maximum Redemption Scenarios respectively. As a result,
it would
         appear that your Book Value per Share amounts should be revised
accordingly. Please
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 3 11, 2022 Page 3
FirstName LastName
         revise or advise. Please also ensure such amounts are updated in the
rest of the filing
         accordingly. For example it would appear such amounts should also be
revised in your
         earlier table on page 23 and on page 15 of your filing.

Unaudited Pro Forma Condensed Combined Financial Statements , page 51

9.       We note that you present a pro forma condensed balance sheet as of
December 31, 2021.
         You should only present a pro forma balance sheet as of the end of the
most recent period
         for which a consolidated balance sheet of the registrant is required,
which in this case is
         June 30, 2022. Please revise to remove your pro forma balance sheet as
of December 31,
         2021.

10.      Please tell us and expand your disclosure to describe how the 76,604
and 49,004 diluted
         pro forma weighted average shares outstanding in the No Redemption and
Maximum
         Redemption Scenarios respectively were calculated.
11.      We note your disclosure on page 60 that adjustment 1(a) reflects the
$9.6 million in
         transactions costs in consummating the Business Combination and that
included within
         are legal, financial advisory and other professional fees related to
the Business
         Combination and such amounts are excluded in the pro forma combined
statement of
         operations as they will be settled as part of the transaction. Please
clarify whether such
         adjustment relates to the deferred underwriting fees as noted on the
pro forma condensed
         combined balance sheet or whether such adjustment also includes
additional transaction
         costs in the form of legal financial advisory and other professional
fees. Furthermore, we
         note your disclosure on page 101 in your disclosure regarding the
estimated sources and
         use of cash from the transaction that you are estimating approximately
$10 million in
         transaction costs and financial advisory fees and expenses to be
incurred by Legato and
         Southland as part of the Business Combination. Please clarify how much
of the
         $10 million of estimated transaction costs will be incurred by each of
Legato and
         Southland. We remind you that transaction costs incurred by Southland
as the accounting
         acquirer, may be offset in equity; however, transaction costs incurred
by Legato are
         considered costs of the merger and should be accounted for in retained
earnings in your
         pro forma condensed combine balance sheet and classified as expenses
in your pro forma
         statement of operations. See Rule 11-02(a)(6)(i)(B) of Regulation S-X
and address the
         need to revise your adjustments accordingly.
Proposal No. 1 - The Business Combination Proposal
The Merger Agreement, page 70

12.      We note that the representations and warranties are qualified by
disclosure schedules.
         Please provide us supplementally with a list that briefly identifies
the contents of the
         disclosure schedules. In addition, please file an agreement to furnish
the staff with a copy
         of any omitted schedule upon request. The agreement to furnish the
staff with copies of
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 4 11, 2022 Page 4
FirstName LastName
         omitted schedules may be included in the exhibit index to the
registration statement.
Background of the Business Combination, page 79

13.      Please expand your background discussion to provide more detailed
disclosure
         regarding key negotiation considerations and how they changed over
time. Currently the
         background disclosure references changing terms and negotiation topics
without
         providing details or explaining their significance or how they may
have changed before
         being reflected in the proposed initial business combination. As
non-exclusive examples
         only, we note the following:
             You reference Legato II's February 15, 2022 initial offer to
acquire Southland but do
             not specify the terms of the offer or whether/how the terms
changed as the parties
             worked through the valuation model;
             You reference "various options and alternatives" discussed on
March 1, 2022 but do
             not identify the options and alternatives;
             You reference several drafts of the proposed merger agreement,
including revisions
             to the definition of adjusted EBITDA and the minimum cash closing
condition, but
             you do not detail or explain the importance of the merger
agreement negotiations;
             You reference the hiring of a third-party claims consultant to
audit and review
             Southland's claims, WIP, backlog and receivables but do not
provide an explanation
             as to why the claims report was sought by Legato II or whether/how
the claims report
             impacted the negotiations.
         Please clarify the discussion points, including these examples;
identify the original terms;
         and explain how and why any terms were revised over time.
Free Cash Flow Potential, page 88

14.      We note your disclosure that Southland   s adjusted cash flow from
operations would have
         been approximately $174.8 million for the year ended 2020 had purchase
accounting
         guidance not been applied. We further note your disclosure that
Southland   s 2021 cash
         flow from operations reflects a reduction of approximately $141
million in cash flows
         from the change in contract liabilities related to the surety fund
cash received as part of
         the acquisition and that these adjustments result in positive adjusted
cash flows from
         operations, for the two years ended December 31, 2021, of
approximately $83.4 million. It
         appears that your disclosure regarding adjusted cash flow from
operations meets the
         definition of a Non GAAP measure and should be reconciled to its
nearest GAAP measure
         in accordance with Item 100(a)(2) of Regulation G and Item 10(e) of
Regulation S-K.
         Please provide such reconciliation in your next amendment or tell us
why you do not
         believe such reconciliation is needed. Furthermore, based on the
nature of the adjustments,
         please tell us how you considered whether the adjustments result in
the presentation of a
         non-GAAP measure that substitutes individually tailored recognition
and measurement
         methods for those of GAAP. Refer to Question 100.04 of the Non-GAAP
C&DIs.
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 5 11, 2022 Page 5
FirstName LastName
Comparable Company Analysis, page 90

15.      Please provide more detail about how Legato II selected the companies
used in its
         comparable company analysis. Also, disclose whether any companies
meeting the
         criterion of publicly traded engineering and construction firm were
excluded from the
         analysis.
Discounted Cash Flow Analysis, page 91

16.      Please disclose the basis for the following assumptions:
             EBITDA margins of 8.7%;
             Weighted average cost of capital of 10.9%; and
             Net debt of $2 million.
         Please also clarify if the sample of comparable publicly traded
companies was the same as
         that used in the comparable company analysis.
Certain Forecasted Financial Information, page 92

17.      We note your disclosure on page 92 that the table summarizes the key
elements of
         Southland's financial projections. We also note your disclosure on
page 95 that in arriving
         at its fairness and valuation opinion, your financial advisor
reviewed, among other
         information, projections with respect to the future financial
performance of Southland
         prepared by management of Southland. Please disclose in the prospectus
the financial
         projections relied upon by your financial advisor in arriving at its
opinion and include
         complete descriptions of the underlying assumptions.
Reasonable Basis Review of Southland's Financial Projections and Underlying
Assumptions,
page 93

18.      Please tell us, with a view toward revised disclosure, whether
EarlyBird or Legato have
         requested or considered requesting an updated certification. We note
in this respect the
         passage of three months since June 30, 2022 and the significant events
in both the public
         stock markets and economy at large since then.
19.      We note your disclosure that the Zukin report includes a    partial
list    of documents Zukin
         received and reviewed, including documents obtained from Southland.
With a view
         toward revised disclosure, please tell us what documents received from
Southland are not
         included in the partial list.
Opinion of Legato II's Financial Advisors, page 94

20.      Please revise to provide a clear explanation as to why the fairness
opinion was obtained by
         the board.
21.      We note that Cassel Salpeter's opinion is dated May 24, 2022 and that
you are working to
         complete the merger by the end of the first quarter of 2023. Please
disclose whether any
         material changes in Southland's operations, performance or in any of
the projections
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 6 11, 2022 Page 6
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         or assumptions upon which Cassel Salpeter based its opinion have
occurred since the
         delivery of the opinion or are anticipated to occur before the
shareholder meeting. Please
         also disclose how you will address material changes in your
assumptions or projections
         that take place after the proxy statement is mailed to shareholders.
Interests of Certain Persons in the Proposed Transaction, page 99

22.      Please expand your disclosure to highlight all material interests in
the transaction held
         by the sponsor and Legato II's officers and directors. This could
include fiduciary or
         contractual obligations to other entities as well as any interest in,
or affiliation with,
         Southland. In addition, please clarify how the Legato II board
considered these
         conflicts in negotiating and recommending the business combination.
23.      We note that part of the IPO underwriting fee was deferred and
conditioned on completion
         of a business combination. Please quantify the aggregate fees payable
to EarlyBirdCapital
         that are contingent on completion of the business combination.
Sources and Uses, page 100

24.      We note that the sources and uses in the slide deck filed by Legato II
under Form 8-K on
         September 19, 2022 differ from disclosures in the Form S-4. Please
revise to reconcile.
Recommendation of the Legato II Board of Directors, page 103

25.      Please disclose how, if at all, the Legato II board of directors
considered the Zukin report.
26.      Please revise to address how, if at all, the board took into account
the consideration to be
         paid for Southland in recommending the transaction to Legato II
shareholders for their
         approval.
27.      Please disclose how, if at all, the Legato II board of directors
considered the Cassel
         Salpeter report/opinion.
U.S. Federal Income Tax Considerations, page 115

28.      Please remove language in the first paragraph on page 115 that the
"discussion is included
         for general informational purposes only...." Investors are entitled to
rely on your
         disclosure.
Information About Legato II
Voting Restrictions in Connection with Stockholder Meeting, page 123

29.      We note your disclosure regarding potential purchases of public shares
by Legato II
         insiders or their affiliates for the purpose of influencing the
stockholder vote to approve
         the business combination proposal at the annual meeting. Please
explain how such
         purchases would comply with the requirements of Rule 14e-5 under the
Exchange Act.
         Refer to Tender Offer Rules and Schedules Compliance and Disclosure
interpretation
         166.01 for guidance.
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 7 11, 2022 Page 7
FirstName LastName
Information About Southland
Overview, page 137

30.      Please revise to provide a basis for the statements that Southland "is
a diverse leader in
         specialty infrastructure construction" and "has become a diversified
industry leader."
Southland's Management's Discussion and Analysis
Overview, page 145

31.      Please revise to provide a basis for the statements that Southland "is
a diverse leader in
         specialty infrastructure construction" and "has become a diversified
industry leader."
Results of Operations, page 148

32.      Please quantify the impact of each factor you identify as materially
contributing to the
         changes in your revenue, cost of revenues and selling, general and
administrative costs for
         each of the periods presented. Please refer to Items 303 of Regulation
S-K.
33.      We note that financial information in the slide deck filed by Legato
II under Form 8-K on
         September 19, 2022 differs from disclosure in the S-4. As a
non-exclusive example only,
         the income statement for the six months ended June 30, 2021 differs
between slide 25 and
         page 152. Please revise to reconcile or advise as appropriate.
Liquidity, Capital Commitments and Resources, page 154

34.      Please provide a more robust analysis of the changes in cash flows
generated from (used
         in) operating activities. Your analysis should quantify all factors
cited and address the
         material drivers impacting those factors. Please note that merely
citing changes in working
         capital items and other items identified in the statement of cash
flows may not provide a
         sufficient basis to understand how and why operating cash between
comparative periods
         changed. Refer to Section IV.B of SEC Release 33-8350.
35.      Based on disclosure elsewhere within your filing, it appears there
will be residual
         cash available subsequent to the merger for future working capital
requirements and
         capital expenditures. Please expand your disclosure to address any
reliance on available
         cash from the merger to meet your liquidity requirements. Your
discussion should
         address how such liquidity requirements are impacted by potential
changes in the level
         of redemptions, which directly impact the amount of residual cash
available for use.
Backlog, page 157

36.      Please revise to address the following:
             Bifurcate your backlog by segment;
             Discuss management's expectations regarding when the backlog will
convert to
             revenue; and
             Disclose the dollar amount not expected to be filled within the
current year.
         In addition, to the extent material, bifurcate the backlog acquired in
the American Bridge
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 8 11, 2022 Page 8
FirstName LastName
         acquisition. In this regard, we note your disclosure on pages 152-153
regarding the
         impacts on your results of operations from working off backlog
acquired.
Market Risks, Trends and Security Analyses, page 157

37.      We note your statement on page 157, "We do not believe that COVID-19
has had a
         material impact on our operating results...." However, we also note
your risk factors
         disclosure that the COVID-19 pandemic has adversely impacted your
business, financial
         condition and results of operations. Please revise or advise as
appropriate.
38.      We note your disclosure on page 158 that although your operations can
be impacted by
         increases in prices, you did not have material impacts to your
profitability due to increased
         costs for the years ended December 31, 2021, December 31, 2020 and
December 31,
         2019. Please expand your disclosure to address the six months ended
June 30, 2022.
Contractual Obligations, page 159

39.      Please expand your disclosure to include information regarding your
debt obligations as of
         June 30, 2022.
Description of New Southland Capital Stock
Legato II Warrants, page 177

40.      Clearly explain the steps, if any, the company will take to notify all
shareholders,
         including beneficial owners, regarding when the warrants become
eligible for redemption.
2. Summary of Significant Accounting Policies
Revenue and Cost Recognition, page F-46

41.      For your capitalized contract assets related to your mobilization
costs and costs to insure a
         contract, please explain to us and expand your disclosure to discuss
the method used to
         amortize such costs over the life of the contract. Furthermore, please
disclose the closing
         balances of your capitalized contract assets by main category of asset
and the related
         amount of amortization expense recognized during the period. See ASC
340-40-50-2 and
         ASC 340-40-50-3.



Goodwill and Indefinite-Lived Intangibles, page F-49

42.      We note your disclosure that you have three reporting units and
currently identify two
         reporting units. Please further clarify the number of reporting units
you have identified. To
         the extent you are aggregating any reporting units, please tell us and
expand your policy
         disclosures to explain how you considered the component aggregation
guidance
         in ASC 350-20-35-35.
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER      CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022       MERGER CORP. II
October
Page 9 11, 2022 Page 9
FirstName LastName
3. Business Combinations, page F-52

43.      We note your disclosure that as part of your acquisition of American
Bridge, you
         recognized the estimated fair value of certain joint venture
investments which are
         primarily related to the Tappen Zee Constructors investment and is
mostly comprised of
         the forecasted recovery of a claim in connection to the Tappan Zee
Constructors joint
         venture. We further note your disclosure that in order to estimate
fair value of the
         investment in subsidiaries, the Tappan Zee investment balance has been
discounted to
         present value using a 4% discount rate and four-year term, which is
estimated to be the
         amount of time for the claim to settle. It also appears that as part
of the merger agreement,
         certain sureties have agreed to fund partner capital calls in exchange
for a portion of the
         claim recovery over $15 million. In order to better understand the
Company's accounting
         related to this joint venture please tell us the following:

                What are the facts and circumstances that drove the claim and
whether there is any
              incremental work to be performed on the underlying contract
related to the claim in
              question;
                The current status of the claim;
                The amount of claim that was recognized as of the September 30,
2020 as part of the
              identified assets assumed as part of the American Bridge
acquisition. Please confirm
              whether such amount is included in the $95 million investments
line item in the table
              disclosed on page F-53;
                How you determined the $43 million in accrued liability related
to the sureties as of
              September 30, 2020;
                The amounts recognized related to the claim and associated
accrued liability to the
              sureties as of December 31, 2021 and June 30, 2022. Please also
confirm the location
              of the claim and associated accrued liability on your
Consolidated Balance Sheet as
              of December 31, 2021 and June 30, 2022;
                Please tell us whether the claim related to this matter is
related to the $105.1 million
              claim amount as of December 31, 2021 included in your investments
(equity method)
              line item as disclosed on page F-61; and
                How the Company is accounting for the claim on a prospective
basis after initially
              recognizing it as of the acquisition date

         In providing your response, please cite all relevant accounting
guidance you relied on
         initially recognizing the asset as of the acquisition date and any
subsequent accounting.
8. Cost and Estimated Earnings on Uncompleted Contracts, page F-60

44.      Please disclose the amount of revenue recognized during the reporting
period that was
         included in contract liabilities at the beginning of the period
pursuant to ASC 606-10-50-
         8b for all periods presented.
 Gregory Monahan
FirstName LastNameGregory
LEGATO MERGER       CORP. IIMonahan
Comapany
October 11,NameLEGATO
            2022         MERGER CORP. II
October
Page 10 11, 2022 Page 10
FirstName LastName
15. MultiEmployer Plans, page F-68

45.      Please disclose for each period presented whether your total
contributions represent more
         than five percent of total contributions to the plan as indicated in
the plan   s most recently
         available annual report. Please also disclose the specific year-end
date of the plan to which
         the annual report relates. Refer to ASC 715-80-50-5(e)(2).
19. Remaining Unsatisfied Performance Obligations, page F-71

46.      Based on your backlog disclosures, please revise your disclosures to
quantify your
         remaining performance obligations and provide an explanation of when
the entity expects
         to recognize such remaining performance obligations as revenue either
on a quantitative
         basis using the time bands that would be most appropriate or by using
qualitative
         information. See ASC 606-10-50-13.


Exhibits

47.      We note your references on pages 82 and 83 to the claims report
prepared by Hill
         International at your request. Please file a consent as an exhibit to
the registration
         statement pursuant to Rule 436 of the Securities Act.
48.      Please file as exhibits any loan agreements between Southland and
Southland officers. In
         this regard, we note your disclosure on page 174 regarding related
party loans. Refer to
         Item 601(b)(10)(ii)(A) of Regulation S-K.
Annex F: Reasonable Basis Review Report of Zukin Certification Services, LLC,
page F-1

49.      Please revise this report to define all abbreviations used (for
example,    DSO    and    DPO
         noted on page F-10).
50.      We note that Zukin    relied in part    on the listed materials on
page F-1. With a view
         toward revised disclosure, please tell us what other materials Zukin
relied upon in
         preparing its report.
51.      Please provide supplemental support for the statement, noted on page
F-2, that    Southland
         has achieved historical revenue and EBITDA growth at rates
significantly higher than that
         of the overall engineering and construction industry and heavy
construction and
         engineering segment over the last five years.
        We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.

       Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
 Gregory Monahan
LEGATO MERGER CORP. II
October 11, 2022
Page 11

statement.

        You may contact Ameen Hamady at 202-551-3891 or Shannon Menjivar at
202-551-
3856 if you have questions regarding comments on the financial statements and
related
matters. Please contact Benjamin Holt at 202-551-6614 or David Link at
202-551-3356 with any
other questions.



                                                        Sincerely,
FirstName LastNameGregory Monahan
                                                        Division of Corporation
Finance
Comapany NameLEGATO MERGER CORP. II
                                                        Office of Real Estate &
Construction
October 11, 2022 Page 11
cc:       Jeffrey M. Gallant
FirstName LastName