Insight

SPAC mergers —the pivotal role of the chief accounting officer

By ensuring the public company readiness of a SPAC business combination, chief accounting officers and controllers have another opportunity to demonstrate their strategic partnership with leadership.

Joseph Dineen

Joseph Dineen

Managing Director, Accounting Advisory Services, KPMG US

+1 248-346-2919

Stefanie A Viereck

Stefanie A Viereck

Director, Accounting Advisory Services, KPMG US

+1 267-315-7052

2 minute read

In recent years, the responsibilities of chief accounting officers (CAOs) and controllers have expanded in many organizations, and the list now includes entities created from mergers with special-purpose acquisition companies (SPACs). While it may seem as though a private company merging with a SPAC becomes a public company overnight, deal makers are tasking the accounting and finance functions to ensure compliance with financial reporting and regulatory requirements—from preparing financial statements under more rigorous accounting standards to filing new forms with the Securities and Exchange Commission (SEC)—amid the rush to complete the transaction prior to the SPAC expiration. Any slip-ups will trigger immediate backlash from regulators and investors alike.

To help CAOs and controllers understand better the challenges SPAC mergers present for them, KPMG has published a report, “SPAC insights: CFO/CAO playbook” based on interviews with several finance executives with SPAC experiences. The key advice they offer should not come as a surprise: plan early for SEC reporting and Sarbanes-Oxley (SOX) requirements; allow ample lead times to update historical financial statements; and beef up investor relations (IR) and financial planning and analysis (FP&A).

In fact, these action items align closely with the four responsibility areas identified in our CAO of the Future campaign:

  • Governance and compliance: Converting the internal controls into SOX-compliant and pivoting to new SEC and Public Company Accounting Oversight Board (PCAOB) requirements.
  • Transactions: Managing expedited timeline to respond to diligence inquiries, accounting for the business combination and meeting pro forma requirements.
  • Transformation: Quickly adapting the CAO organization to new accounting standards, executing and maintaining new SEC reporting requirements, and acquiring new talent.
  • Business partnering: Rapid coordination with key stakeholders—i.e., chief financial officer (CFO), IR, and FP&A—to execute the merger and deliver strategic data and insights.

The boom in SPAC mergers is yet another market-driven opportunity for CAOs and controllers to show their versatility and adaptability in a rapidly changing business landscape—and become essential strategic contributors to company leadership. For more on navigating the CAO journey, please refer to our expanding library of reports and a listing of contacts on CAO of the Future.