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The SPAC (Specified Purpose Acquisition Company ) An Overview and Recent DevelopmentsMerger AheadThe SPAC Practice at Ellenoff Grossman & Schole LLP During the course of the last 10+ years, Ellenoff.

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SPAC is the acronym for “special purpose acquisition company” and is often referred to as a “blank check” entity. A SPAC might be best described as money looking for a promising private company to invest in. A SPAC is a public company having already gone through the IPO process.

Cost: Unlike traditional IPOs that are very expensive to execute, SPACs typically pay for most of the costs, saving a significant amount of money for the company. Certainty: SPAC deals are identified ahead of time, and the valuation is agreed upon by both parties.

SPACs typically use the funds they've raised to acquire an existing, but privately held, company. They then merge with that target, which allows the target to go public while avoiding the much longer IPO process.

A special purpose acquisition company (SPAC) is formed to raise money through an initial public offering (IPO) to buy another company. At the IPO, SPACs do not have business operations or stated targets for acquisition. SPAC shares are structured as trust units with a par value of $10 per share.

Because their shares do not pay off unless a merger closes, SPAC founders have a strong incentive to merge with a target even if it is a losing proposition, with the inherent costs of the SPAC being passed on to those shareholders who do not redeem their shares.

Fees and Dilution for SPAC Investors In the transaction, the SPAC sponsor gets $20 million worth of additional shares. Who pays that? Technically, the target pays it but, depending on the valuation, the retail investor is really the one who ends up paying it.

What is a SPAC? Special purpose acquisition companies (SPACs) have become a preferred way for many experienced management teams and sponsors to take companies public. A SPAC raises capital through an initial public offering (IPO) for the purpose of acquiring an existing operating company.

SPACs are also known as blank check companies because the target company is unknown to investors at the time of the IPO. After a SPAC goes public, it typically has around two years to acquire one or more companies. When a company gets acquired by a SPAC, it goes public without paying the fees associated with an IPO.

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© Copyright 1997-2025
airSlate Legal Forms, Inc.
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Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
All Forms
Search all Forms
Industries
Forms in Spanish
Localized Forms
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232