3 steps from SPAC target to SPAC deal
SPACs are booming. In 2020, half of all IPOs were via a SPAC in the US alone. In the Netherlands, things are also moving quite fast. Is your company also a SPAC target? Do not make the mistake of starting to prepare for the SPAC process too late. Find out how best to prepare for negotiations and get the best possible SPAC deal in 3 steps.
Why a SPAC is so popular
SPAC stands for Special Purpose Acquisition Company. A SPAC is an inexpensive and quicker way to get listed compared to the traditional IPO (Initial Public Offering). As the name suggests, the purpose of a SPAC is to facilitate a takeover. With a SPAC, investors start by raising money from investors in the public capital markets. The purpose of a SPAC is to subsequently take over a company within a period of two years, resulting in the company being listed on the stock exchange. As a company, you can then create the kind of future that suits you best. However, in order for that to happen, the takeover has to be planned properly.
How to ensure that you have a successful SPAC takeover
In the Netherlands, CM.com is a successful example. The Breda-based company went public via a SPAC and is now showing a nice price gain. Not everyone can do it. Why? Many SPACs have not yet completed any takeovers. A SPAC has to make an acquisition within two years with the money that it raises. If not, the money must be returned to the shareholders. What often happens now, is that SPACs do not make an acquisition until the end of that term, which results in the risk of a bad deal. It is therefore important to prepare well and in good time in case a SPAC approaches you concerning a takeover. This is all the more true because you then have to be ready for a faster IPO.
What you will need to do as a SPAC target
Once you have signed a letter of intent as a management team, you will have to be ready to operate as a listed company within a period of 3 to 5 months. You will have to meet complex accounting and financial requirements for reporting and record-keeping. These include financial statements for past years as well as for the expected impact of the merger. The SPAC will also have to seek approval from shareholders for a deal to be finalized. The requested company information will also be needed. You will find all this information in one handy overview in our free download.
How to prepare for a SPAC deal if you are a SPAC target
How do you find the right SPAC partner? How can you best negotiate the purchasing conditions with them? All it takes is 3 steps to prepare yourself for simultaneous negotiations with multiple SPAC candidates and to get the best possible SPAC deal.
1. Download the completed list with information requests
Request our free Information Request List (IRL). In it, you will find a questionnaire with a complete list of over 150 information requests, neatly arranged in various categories. This is the information that you can share with SPACs in your data room.
2. Open a data room: The SPAC Vault
Open a virtual data room where you can share confidential information from the IRL with SPACs quickly, easily and securely. With the SPAC Vault from Virtual Vaults, you can do it in no time.
3. Share the information securely with SPACs
Is all the requested information from the IRL in the SPAC Vault? Then you can share it with SPACs with peace of mind and easily answer questions online via Q&A. Another successful SPAC deal in the making.
Start with step 1. This will ensure that you are well prepared and ready for a smooth SPAC process, as well as a successful IPO.