The parade of SPAC IPOs may have slowed to a crawl in 2008, but those special purpose acquisition companies already out looking for acquisitions are finding that the private equity firms they once saw as competition are providing a place to put their money.
Bloomberg is
reporting that buyout firms are increasingly looking to SPACs when they try to exit portfolio companies in this tight credit market. The news service quotes Skadden, Arps, Slate, Meagher & Flom LLP partner Thomas Ivey as saying: "We're definitely seeing private-equity firms talk to SPACs as possible exits for their portfolio companies, the M&A market for traditional private-equity purchasers is closed. The other piece is that the IPO market is closed."
Indeed this year has seen a
rise in the sale of portfolio companies to SPACs. The Deal's John Morris
writes:
In some cases, the Spac deals have allowed buyout firms to sell out for cash, but in others, they have allowed a sponsor to take a portfolio company public through a reverse merger.
Examples include:
- In March, Kirtland Capital Partners sold Essex Crane Rental Corp. to Hyde Park Acquisition Corp., for $103 million.
- February saw Kohlberg & Co. LLC agree to sell Critical Homecare Solutions Holdings Inc. to the SPAC MBF Healthcare Acquisition Corp. for $420 million;
- H.I.G. Capital sold Stream Holdings Corp. to Global BPO Services Corp. for $226 million in January.
Those three deals matched all of the sales to SPACs made in 2007. (See Chart of PE-to-SPAC sales since 2006 here) - George White
See Bloomberg story
See list of PE-to-SPAC sales
See feature on SPACs on TheDeal.com
See Critical Homecare story on TheDeal.com
