Now that the Covid-19 crisis has seemingly eased and the reopening of the economy has begun, markets seem to have bottomed out and recovered. The recovery may be slow, but it has been enough to unfreeze the IPO market for SPACs (special purpose acquisition companies). SPACs are essentially blank check companies with the intention of raising capital to acquire an existing company and have been around for decades.
In the first quarter, for instance, of the almost two dozen IPOs that priced, more than half were SPACs, and we continue to see private equity firms help bring companies to the public markets via SPACs. Will this trend continue as the economy rebounds from the pandemic and companies 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 different from typical M&A transactions, and what nuances do investors and companies need to be aware of?
Dr. Avi Katz, GigCapital’s Founder, Chairman and CEO, has spent more than 30 years holding international managerial and executive positions in the high-technology sector. He is a serial entrepreneur and angel investor with decades of experience working for companies of every size, from start-ups to global enterprises.
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SPACs have seen a recent resurgence as the market deals with high levels of liquidity, depressed valuations and a strong appetite for growth companies.