The journey to de-SPACing and beyond: key securities law considerations for former SPACs
20 October 2020
Our guidance on the key securities law considerations which uniquely impact public companies that began their lives as SPACs.
While much has been written in recent months about the veritable explosion of SPACs in the U.S. IPO market, relatively little attention has been paid to the post-business combination life of a former SPAC, especially as relates to certain of the key securities law and related matters that uniquely impact public companies who began their lives as SPACs. This article endeavors to provide insight into this less covered aspect of SPAC transactions and focuses on the post-SPAC life of the company, following completion of the business combination.
Unlike the early years of SPAC transactions in the 1990s, today’s SPACs are characterized by high quality companies with experienced management teams and higher profile sponsors of the SPACs, including top tier private equity firms and investment banks. In many cases, these sponsors and other participants return to the SPAC market, launching multiple SPACs and seeing those SPACs from IPO to de-SPACing, the process, in connection with the business combination transaction, by which the former SPAC prepares for and, upon completion of the business combination, continues its life as a U.S. public company. The preparation for and the continuation of the company’s life post-SPAC is critical to the success of the post-business combination company and will lay the groundwork for the operating business’s life as a public company.