Special Purpose Acquisition Companies: Structuring IPOs and Facilitating Future Mergers and Acquisitions

Navigating SEC and Stock Exchange Requirements, Warrants, Trust Accounts, Valuation of Target Companies and SPAC Business Combination Issues

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


Conducted on Tuesday, September 19, 2017

Recorded event now available

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Program Materials

This CLE webinar will examine IPO requirements and operational matters associated with special purpose acquisition companies (SPACs), as well as issues to consider in connection with a SPAC’s initial business combination. The panel will discuss the typical pricing of securities (and the components of SPAC securities), trust account requirements, time constraints, valuation requirements and conflicts issues in connection with any target acquisition, and how the SPAC must be unwound if an acquisition does not occur.

Description

SPACs allow sponsors to raise capital through an IPO of securities in a new corporation, with the purpose of identifying and acquiring or merging with an existing company. They also offer investors the opportunity to own publicly traded shares in a company with the flexibility of a private equity fund. But, there are structural and operational concerns which counsel must consider in advising a SPAC.

SPACs enjoy a streamlined IPO process, but specific SEC registration and disclosure requirements apply. SPACs must meet listing standards relating to market cap, number of shares sold and number of holders, and the offering must be reviewed by FINRA and a “no objection” letter obtained. The sponsor must avoid any contacts with potential target businesses before and during the IPO.

Proceeds of the IPO must be placed into a trust account administered by a third-party trustee. Proceeds may not be released from the trust account unless a business combination is completed within a specified time frame, after which shares must be redeemed and funds returned to the investors. The target company must have a fair market value that is equal to at least 80% of the SPAC’s trust assets.

Listen as our authoritative panel discusses the disclosure and operational requirements particular to SPACs, the timing and valuation parameters relating to SPAC target acquisitions and issues that may arise in a SPAC’s initial business combination. The panel will also discuss the typical pricing of SPAC securities and trust accounts.

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Outline

  1. Strategic advantages of SPAC; advantages over private equity
  2. IPO process—registration and disclosure requirements
  3. Listing on the exchange; continued listing requirements and FINRA review
  4. Capital and pricing structure—shares and warrants
  5. Trust account requirements
  6. Issues to consider during business combination negotiations, including board seats, indemnification, and related escrow provisions
  7. Deadline for completing acquisition
  8. Follow-up filings after IPO and upon acquisition
  9. Unwinding if acquisition is not completed

Benefits

The panel will review these and other key issues:

  • When is a SPAC an appropriate vehicle for facilitating business combinations with existing companies?
  • What are the registration and listing requirements for SPACs?
  • What happens to trust funds and the SPAC if a business combination is or is not consummated by the required deadline?

Faculty

Matthew A. Gray
Matthew A. Gray

Partner
Ellenoff Grossman & Schole

Mr. Gray represents clients in all aspects of corporate, securities and commercial law, with a focus on...  |  Read More

Douglas S. Ellenoff
Douglas S. Ellenoff

Member
Ellenoff Grossman & Schole

Mr. Ellenoff is a securities attorney with a specialty in business transactions, mergers and acquisitions and corporate...  |  Read More

Stuart Neuhauser
Stuart Neuhauser

Member
Ellenoff Grossman & Schole

Mr. Neuhauser is a corporate and securities attorney with a focus on business transactions and corporate financings....  |  Read More

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