Of all the things we teach, train, share: how companies raise capital was rooted in fundamentals and did not used to change much. Every year, several times, we added newer case studies.
So, the starting point has always been: companies have business ideas and projects and they take that to investors.
Compare that to having to explain the SPAC, also known as the Blank Check Company.
1. The company carries out an IPO.
2. It has no objectives, no business plan, nothing to share.
3. People actually commit to subscribe! But do not actually put in cash.
4. When the company finds something nice to buy it will let the investors know.
5. Investors can then decide if they like it. And will opt-in or opt out.
Is this even legal?
Yes. The SEC gives approvals based on point # 4 and #5.
SPAC is the short form for “Special Purpose Acquisition Vehicle” – a company set up just to acquire a target company.
The success of this IPO with investors depends on the background of the sponsor who is setting this up. Has it been historically successful with making great acquisitions?
The advantage of this approach is it allows the SPAC to keep secret the identity of its acquisition target. If in an IPO document the target is named, then the SPAC may end up paying too much for the acquisition.
All this finds place in our programs as we keep upgrading the topics to include newer case studies.
In recent years some of the dimensions have found their way in are:
1. How Private Capital has outpaced public markets.
2. How Unicorn-scale businesses have arrived without public funding.
3. The low-down on private capital and hedge funds.
4. Offers for Sale which do not involve a business plan to be funded.
And now SPACs. And then there will be more.
There is nothing more enriching than being a research oriented educator. And the world is indeed a fascinating place.
For those of you interested in more over SPACs head over to:
1. Head over here to read up on how the SEC describes Blank Check Companies.
2. Read here about Chamath Palitapithiya, the new rising star in the world of investments; and SPACs.
3. Review some recent SPAC listing tombstones here.