![]() With a market that’s been racked by volatility and larger-than-normal unknowns, it’s become a more attractive way of going public.īackers of new SPACs are often looking for distressed companies to acquire (from the pandemic fallout) or those in compelling growth verticals. The pandemic itself has also shifted the S curves of some business trends. ![]() The coronavirus crisis and its economic fallout have created a new wave of interest in the investment vehicle. They are traditionally popular in the TMT space (technology, media, and telecommunications), healthcare, and retail. Goldman underwrote its first SPAC IPO in 2016. These days, they are often backed by white shoe investment banks, including Goldman Sachs, Morgan Stanley, JPMorgan, and other prominent investors, and listed on leading exchanges like the NYSE or NASDAQ. Back then, they were commonly populated by lower-quality or even fraudulent companies. The blank check structure is not a new concept, having gone back to at least the 1980s. The interest accumulated will normally be returned to investors at some point or be used to help fund the operations of the target company. SPAC funds are placed in a trust account and will typically bear interest. So, naturally, SPACs tend to be headed by popular investors such as activist investor William Ackman or former Citigroup banker Michael Klein. They’ll typically make a determination of whether to invest in the SPAC based on their trust in the particular investor/entity seeking to make the acquisition. Investors in the IPO are not aware of what company they’ll be investing in. If they do have a target firm they’re looking to acquire, they won’t identify what it is. SPACs are unique in that they have no pre-existing business operations or even a particular target company in mind to acquire. It’s essentially a form of a backdoor IPO. Here we explain the analytics and meaning of SPAC in investing terms.Ī SPAC is essentially large pool of cash, which is listed on a public exchange with the sole purpose of completing an acquisition. What does the SPAC acronym mean? SPAC is short for a Special Purpose Acquisition Company, also known as a “ blank check” company. How Can The SPAC Blank Check Company Structure Be Strengthened?.Criticisms Of The SPAC Blank Check Structure.Many SPACs Merge With Pre-revenue Companies.Is The SPAC Boom Too Frothy To Justify?.Differences Between The US And European Markets.
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