Selling to a special-purpose acquisition company can be quick and lucrative – if you know the risks, complexities and tradeoffs.
Burger King. American Apparel. Jamba Juice. What do they have in common? They were all acquired in deals involving special-purpose acquisition companies (SPACs)—publicly traded and expert-sponsored entities created for the sole purpose of acquiring one or more targets. SPAC deals dried up after the global financial crisis of 2007-2008.
Now, SPACs are back.
Since 2015, SPACs have raised billions in public offerings to buy up companies across industries from consumer to energy to fintech. For private-equity firms and other sellers, selling to a SPAC can offer a quick, well-priced transaction. Yet SPAC deals are not simple. They are closely regulated by the Securities and Exchange Commission. It’s like filing for an IPO, but everything must be done on tight deadlines because SPACs expire—if a deal is not completed by a certain date, the SPAC must liquidate, leaving the seller to start over again.
New KPMG report
KPMG’s report SPACs: A big deal again explains the benefits as well as the risks, complexities and trade-offs potential stakeholders involved in a SPAC deal must know. We provide practical advice for:
Being well-prepared for—and realistic about—the special considerations and nuances of a SPAC deal will help ensure successful execution.