As the market continues to see high levels of liquidity, depressed valuations and a strong appetite for growth and disruptive companies, SPACs (Special Purpose Acquisition Companies) have had a recent resurgence. While the economic recovery may be slow, it has opened the IPO market for SPACs, which are shell companies created for the sole purpose of taking a private company public and have been playing a significant role in the M&A market, as capital has flowed in at a staggering rate.
SPACs are being backed by investment banks, hedge funds, PE firms and venture capital firms. For sellers, SPACs expand the investor pool and provide a way to access capital that otherwise might not have been available and may be more desirable than an outright sale to another corporate or PE buyer.
Will we continue to see companies using SPACs as they seek alternative routes to the public market? In a time of depressed valuations, what are the challenges that surround these transactions? How are these transactions filling a unique role in the M&A landscape? What nuances do investors and companies need to be aware of?
Mitch Nussbaum is the vice chair of Loeb & Loeb and serves as co-chair of the firm’s Capital Markets and Corporate Department. His practice focuses on representing emerging growth companies and investment banks in initial public offerings, follow-on public offerings, shelf takedowns, registered direct placements, PIPEs and other private placements (144A, Reg D, Reg A, Reg S, etc.).
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