![]() Once a target company is identified and a merger is announced, the SPAC’s public shareholders may alternatively vote against the transaction and elect to redeem their shares. If the SPAC does not complete a merger within that time frame, the SPAC liquidates and the IPO proceeds are returned to the public shareholders. Following the IPO, proceeds are placed into a trust account and the SPAC typically has 18-24 months to identify and complete a merger with a target company, sometimes referred to as de-SPACing. The target company’s management team will need to focus on being ready to operate as a public company within three to five months of signing a letter of intent.Įxplore recent SPAC activity in our latest Capital Markets WatchĪ SPAC’s IPO is typically based on an investment thesis focused on a sector and geography, such as the intent to acquire a technology company in North America, or a sponsor’s experience and background. However, the merger of a SPAC with a target company presents several challenges, including having to meet an accelerated public company readiness timeline as well as complex accounting and financial reporting/registration requirements that may differ based upon the lifecycle of the SPAC involved. SPACs could also potentially lower transaction fees as well as expedite the timeline to become a public company. ![]() ![]() This approach offers several distinct advantages over a traditional IPO, such as providing companies access to capital, even when market volatility and other conditions limit liquidity. Here we discuss how SPAC mergers work and the related accounting and reporting issues. Subsequently, an operating company can merge with (or be acquired by) the publicly traded SPAC and become a listed company in lieu of executing its own IPO.Ī recent PwC Deals blog explores why companies are joining the SPAC boom, including recent trends and the potential advantages. A SPAC raises capital through an initial public offering (IPO) for the purpose of acquiring an existing operating company. ![]() Special purpose acquisition companies (SPACs) have become a preferred way for many experienced management teams and sponsors to take companies public. ![]()
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