There is rarely a day that goes by where the word "SPAC" is not uttered in my home office. My kids think this is a bad word and it makes them laugh.
But SPACs are no longer a laughing matter. My clients are being pitched constantly with a variety of SPAC proposals from a plethora of reputable SPAC sponsors.
SPACS may offer companies the ability to combine the best aspects of IPO and M&A.
This great article from The Information highlights a couple of these M&A benefits that can be used in connection with a SPAC:
- SPACs allow existing existing shareholders to negotiate additional consideration if the stock performs well post-SPAC.
- SPACs allow the sponsor and existing management to select good long term investors by arranging for a contemporaneous PIPE transaction with its favored investor.
My colleagues @Mintz have been working with SPACs for more than 15 years. We are putting out some great information on SPACs and advising clients constantly on the benefits and risks of this exist strategy.
If you are considering a SPAC or want to learn more, please reach out to me at [email protected]
The proliferation of SPACs means that companies with a decent business are getting flooded with SPAC merger proposals—some report a dozen or more, up from one or two last year. That gives companies the room to bargain for attractive terms.