In Turim’s May 2021 newsletter they discuss SPACs as an alternative to a traditional Initial Public Offering (IPO).
What is a SPAC?
A SPAC is an alternative to a traditional Initial Public Offering (IPO), allowing a privately held company to become a public company
without the constraints of a classic listing. This is because the company becomes publicly traded after being acquired by an entity
that is already listed. The determining factor is that the listed company is a legal structure with no operating business, revenues, or
assets, and only has cash that has been contributed by its investors. This unusual entity is called a SPAC, a Special Purpose Acquisition
Company and its simple purpose are to find a private company that will agree to combine with it to become a public company. As
well as cash, a SPAC has a lean team and a timeframe of 18 to 24 months to carry out its purpose. If this does not happen, the
structure is self-liquidating, and the capital is returned to its shareholders.
Further information on Turim MFO’s update, on SPACs, can be found here.