When special purpose acquisition companies (SPACs) were first introduced over ten years ago, many were skeptical about how a blank check company could successfully bring an operating company public.
SPACs have a limited life and depend on finding the right private company to bring public – if they do not close within a certain period of time (typically two years), these investment vehicles are forced to liquidate.
Many people became strong believers in SPACs after seeing how well the structure protects the interests of investors. Average investors now have many of the same tools that were once only available to venture capitalists. SPACs are traded on the NYSE, NASDAQ and over-the-counter markets – and when traded, they provide the investor with a fully liquid instrument.
From a private company perspective, the process of going public via a SPAC merger poses much less risk than the traditional IPO route – especially when a specific cash amount is needed to support this private company.
For the qualified investor and/or employee, the disadvantage of owning shares of a private company is their limited tradability, dictated by windows of time, uncertain valuations and potential lack of liquidity. But in the public market, SPAC shares can be sold at any time with greater transparency of valuation.
When considering any type of corporate action, it is vital to look at your partner’s expertise, technology and infrastructure to ensure flawless execution.
It is critical to have steps in place to assure that the capital raised in the SPAC from investors is invested correctly, following applicable regulations and the investment requirements outlined in the prospectus. As a well-established trustee, EQ has multiple secure banking partners that are well equipped to handle large cash positions. This financial stability also gives us the ability as a payment/disbursement agent to secure and guarantee that all funds are available when they are needed. This is true for redemptions, merger closings and, when needed, for liquidation.
When considering any type of corporate action, it is vital to look at your partner’s expertise, technology and infrastructure to ensure flawless execution. Having protected investor interests for more than 90 years, serviced transactions in excess of $74 billion and participation in the ZoomInfo IPO of $935 million, we are confident in our ability to navigate the responsibilities of the trustee.