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Acquiring a De-SPACed Company: Board Considerations, Capitalization Structure, Warrants, Tax Issues

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Wednesday, December 7, 2022

Recorded event now available

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This CLE webinar will examine the issues associated with M&A transactions involving a de-SPAC target company, including special fiduciary concerns of directors and officers when the offered price is below initial valuations, navigating the complex capital structures of de-SPAC companies, how to assess current and potential liabilities of the target, and potential tax ramifications of a de-SPAC acquisition.


The SPAC IPO market and the de-SPAC market have slowed dramatically during 2022. However, M&A activity involving de-SPACed companies has picked up significantly, driven both by de-SPACed sellers in search of a buyer, as well as strategic buyers aiming to acquire desirable companies at attractive values. M&A transactions involving de-SPACed companies present many unique issues, including:

The de-SPACed company’s board of directors will need to make important fiduciary decisions. If a de-SPACed company that is trading (significantly) below its IPO price is considering an M&A transaction, especially one where the consideration will be all or mostly cash, the de-SPACed target’s board will need to engage in important fiduciary deliberations. The target’s board may consider, where relevant, questions such as: Is this the right time for the company to sell? What constitutes fair value for the target’s shares? How important is the $10 per share SPAC IPO price as a benchmark?

Different shareholder groups may have different views as to whether a transaction is desirable, as they may have acquired their shares in the de-SPACed target at different prices. They may thus stand to benefit differently from a potential transaction--especially one at a loss relative to the de-SPAC acquisition value--even if they receive the same consideration.

Voting power may be concentrated with a few shareholders who may determine whether shareholder approval for a transaction can be obtained. Because of this, it is important to determine which shareholders can sway, and potentially decide, the outcome of the shareholder vote and the extent to which they will be supportive not only of a transaction, but also willing to sign up voting agreements in favor of a deal.

De-SPAC directors may be nominated by certain shareholders and may face actual or perceived conflicts. This highlights the need for some de-SPACed targets to assess process issues, potentially including, given the facts and circumstances of the proposed transaction, the need for, or benefits of, creating a special committee or seeking a “majority of the minority” vote.

De-SPACed companies may have very complex capitalization structures, including multiple classes of stock, earnout shares, and multiple types of warrants. De-SPACed companies often have multiple classes of stock (including potentially high vote and low vote stock). In addition, it is not uncommon for founders and other legacy target shareholders to be entitled to “earnout shares” or that a portion of the SPAC sponsor’s shares may be subject to “vesting” or “forfeiture back” provisions. Also, as part of the initial de-SPAC transaction, de-SPACed companies typically inherit “public warrants,” which were issued to the public investors in the SPAC IPO, and “private placement warrants,” which were issued to the SPAC sponsor, as well as potentially PIPE investors, in putting together the financing for the deal.

Some de-SPACed companies are organized as “Up-Cs” for tax purposes. As such, acquiring a de-SPACed company that is organized as an Up-C is even more challenging from a corporate perspective.

Listen as our authoritative panel discusses the key issues for both the acquirer and the target in a de-SPAC M&A transaction.



  1. De-SPAC companies as potential targets in the current market
  2. Board considerations
  3. Assessing shareholder support
  4. Navigating complex capital structures
    1. Earnout shares
    2. Warrants
  5. Tax issues: Up-C entity structures, tax receivable agreements
  6. Risk of litigation or investigation


The panel will review these and other key issues:

  • What factors have made de-SPAC companies desirable acquisition targets in today's market?
  • What are some particular concerns of de-SPAC directors in considering the sale of the company?
  • How might earnout shares and warrants affect the purchase price and the closing process in a de-SPAC acquisition?
  • How should existing or threatened litigation be addressed in a de-SPAC acquisition?


Hochenberg, Jenny
Jenny Hochenberg

Freshfields Bruckhaus Deringer

Ms. Hochenberg focuses her practice on mergers and acquisitions, corporate governance and disclosure matters and...  |  Read More

Koslowsky, Brayden
Brayden Koslowsky

Freshfields Bruckhaus Deringer

Mr. Koslowsky is an associate in our M&A practice in New York.

 |  Read More
Lee, Daniel
Daniel Lee

Managing Director
Moelis & Company

Mr. Lee is a Managing Director at Moelis & Company where he provides strategic and financial advice to clients on...  |  Read More

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