Kroll: How Will Recent SEC Scrutiny Impact the Viability and Valuation of SPACs?
Over the past three decades, special purpose acquisition companies (SPACs) have been an investment vehicle that has flown generally under the radar. However, from the second half of 2020, through early April of 2021, the number of new SPAC IPOs and related acquisitions increased at a frenzied pace, with more proceeds raised in SPAC IPO’s during this period than the preceding 10 years combined. On April 12, 2021 the SEC issued a statement highlighting that the accounting for SPAC warrants as equity rather than debt may need to be reconsidered. In response, the entire SPAC market was shut down for a period of time. While new SPAC IPOs are raising capital again and existing SPACs are working to close on target acquisitions, will the SPAC market continue with the same accelerated growth?
Schedule: 12:00 p.m. – 01:15 p.m. EDT
Please join us for a discussion of key issues surrounding the SPAC warrant accounting and valuation question, a broader discussion of SPAC valuation issues important to alternative investors, and a view on the future of SPACs as a vehicle for private investors to exit portfolio company investments.
- Overview of the SPAC market and why it is increasingly used to take private companies public.
- Why the SEC questioned warrant accounting, what was wrong, how it was fixed and what a warrant liability tells public and private investors.
- What we have learned from SPAC restatements and recent regulatory filings.
- What impact the change in SPAC warrant accounting will have in estimating the fair value of private SPAC shares and warrants, private investments in public equity (PIPEs), SPAC forward purchase agreements and SPAC loans convertible into warrants.
- If the warrant question will slow down the SPAC market or reheat to early April 2021 levels.