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Why PE is on the SPAC inside track
Manage episode 285850189 series 2659320
In this episode, Karim Anani and Alex Zuluaga, EY Global SPAC Practice Co-Leaders, explore why SPACs attract PE investors and advise how they should manage SPAC transactions.
Contact Karim: karim.anani@ey.com Contact Alex: alex.zuluaga@ey.com
Visit ey.com to read our latest private equity perspectives.
Special Purpose Acquisition Companies (SPACs) are rapidly evolving from an interesting option to a desired path of taking a company public. This malleable vehicle is becoming better understood, more widely accepted and is proving to be a highly adaptable way to meet the needs of both operating companies and investors. A key factor in this flexibility is because a SPAC transaction is a merger, not an IPO.
Unlike a traditional PE fund vehicle in which a fund invests in multiple companies, a SPAC will instead effectuate a single transaction. As a result, a PE fund’s investment philosophy, strategy and approach for a SPAC differs from its traditional investment model.
A SPAC appeals to private equity (PE) investors for several reasons:
- Speed at which capital can be raised
- Opportunity to expedite entry to public market
- Ability to tell the story with the aid of future projected earnings of the company
- Opportunity to explore a different investment thesis
- Potential for significant upside as SPAC sponsor
- Definition of minimum cash and financing structuring options on the front end create a lower risk of deals falling apart
PE funds interested in utilizing a SPAC as an exit vehicle should consider the following recommendations:
- Define transaction goals and value drivers
- Choose a SPAC that aligns with the industry of operating company
- “Get your house in order” to be more attractive for a SPAC exit
- Attend to backward-looking compliance procedures
- Ensure company is able to function like a public company from an operational and talent standpoint
- Anticipate the regulatory and compliance landscape to continue evolving
70 פרקים
Manage episode 285850189 series 2659320
In this episode, Karim Anani and Alex Zuluaga, EY Global SPAC Practice Co-Leaders, explore why SPACs attract PE investors and advise how they should manage SPAC transactions.
Contact Karim: karim.anani@ey.com Contact Alex: alex.zuluaga@ey.com
Visit ey.com to read our latest private equity perspectives.
Special Purpose Acquisition Companies (SPACs) are rapidly evolving from an interesting option to a desired path of taking a company public. This malleable vehicle is becoming better understood, more widely accepted and is proving to be a highly adaptable way to meet the needs of both operating companies and investors. A key factor in this flexibility is because a SPAC transaction is a merger, not an IPO.
Unlike a traditional PE fund vehicle in which a fund invests in multiple companies, a SPAC will instead effectuate a single transaction. As a result, a PE fund’s investment philosophy, strategy and approach for a SPAC differs from its traditional investment model.
A SPAC appeals to private equity (PE) investors for several reasons:
- Speed at which capital can be raised
- Opportunity to expedite entry to public market
- Ability to tell the story with the aid of future projected earnings of the company
- Opportunity to explore a different investment thesis
- Potential for significant upside as SPAC sponsor
- Definition of minimum cash and financing structuring options on the front end create a lower risk of deals falling apart
PE funds interested in utilizing a SPAC as an exit vehicle should consider the following recommendations:
- Define transaction goals and value drivers
- Choose a SPAC that aligns with the industry of operating company
- “Get your house in order” to be more attractive for a SPAC exit
- Attend to backward-looking compliance procedures
- Ensure company is able to function like a public company from an operational and talent standpoint
- Anticipate the regulatory and compliance landscape to continue evolving
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