Exit Strategies Through SPAC
An increasingly popular (and controversial) exit option for companies with enough marketable traction is the Special Purpose Acquisition Company (SPAC).
A SPAC is a essentially a shell company formed with the sole purpose of acquiring a to-be-determined unidentified, operational business using funds raised in an initial public offering (IPO). So in a nutshell:
A public shell company (SPAC) is formed through IPO $$, with the purpose of identifying and acquiring a to-be-determined private, real, live operational company.
The clock starts ticking and the public SPAC needs to make an acquisition, otherwise give the money back to investors.
Shell company (SPAC) finds said real, private, live operational company and acquires it
Acquired private company Abra Ka Dabra becomes publicly traded, without the associated diligence & "under the hood" investigation typically associated with the IPO process (Think WeWork flameout)
Entrepreneurs / founders get liquidity (i.e. $$$), jobs and equity.
So, we asked our BizNexus Community M&A professionals how they felt about the 2022 SPAC exit strategy trend. Here’s what they had to say:
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