Spacs can be good exit alternatives for portfolio companies
of private equity and hedge-fund investors due to their unique
structure and limitations, especially given the chilled IPO and
credit markets. However, these unique structures and
limitations also lead to issues for a Spac that is running out
There are different ways to solve these issues, depending on
risk tolerance, but they should be explored and negotiated
before executing the merger agreement. By discussing them early
and openly in the negotiation of the merger agreement, a
portfolio company should be able to avoid any surprises and
create a successful business combination with a Spac.
Becoming a viable route With SEC approval of the listing
rule changes on July 25 2008 for Nasdaq and on May 6 2008 for
the NYSE allowing both to list special purpose acquisition
companies (Spacs), and the listing of high-profile Spacs since
late 2007, including Liberty...