toppan merrill
  • Insights
  • About Us
  • Contact
  • Client Login

    Toppan Merrill Bridge™

    Content Control

    My Workspace

    Form N-MFP Online

    Toppan Merrill Document Delivery

    Toppan Merrill Insurance Solutions

    Section16Direct

    SEC Connect

    SOX Automation

  • EN

    English

    简体中文 (Simplified Chinese)

    繁體中文 (Traditional Chinese)

  •  
  • Capital Markets Transactions
    • Capital Markets Transactions

      Equity, Debt & IPO Offering Management Services

      M&A

       

       

       
       

      Capital Markets Transactions Resources

      Insights & Analysis

      Events

      SEC Resources

      EDGAR Resources

      XBRL Resources

       

       

      Capital Markets Transactions Products

      Bridge

      Built on the Microsoft® Office® platform, Bridge makes disclosure content management easier, faster and more accurate.

       

       

       

  • Regulatory Disclosure
    • Regulatory Disclosure for Corporations

      Annual Meeting & Proxy Solutions

      Periodic & Interim Reporting

      iXBRL and EDGAR for US-GAAP & IFRS Filers

      iXBRL for ESEF Filings

      SEDAR Filings

      Section 16 Filings

      Automated SOX Compliance

       

       

      Regulatory Disclosure for Investment Management

      Periodic & Interim Reporting and Prospectuses

      Component Content Management & Output

      Website Document Hosting

      Shareholder Preference Center

      Compliance Center for Variable Products

       

       

       

      Regulatory Disclosure Resources

      Insights & Analysis

      Events

      SEC Resources

      EDGAR Resources

      XBRL Resources

       

       

      Regulatory Disclosure Products

      Bridge

      Built on the Microsoft® Office® platform, Bridge makes disclosure content management easier, faster and more accurate.

       

       

      SOX Automation

      Intuitive SaaS technology that centralizes all business locations, processes, risks and controls delivering efficiency, transparency, and predictability of cost.

       

       

  • Sales & Marketing Communications
    • Sales and Marketing Communications

      Offerings

      Omni-channel communications

      Document Creation & Management

      Sales Enablement

      ADA Services

      Fulfillment & Distribution

      Printing Services

       

       

       

      Industries

      Financial Services

      Health Insurance

       

       

       

      Sales and Marketing Communications Resources

      Insights & Analysis

      Events

       

       

      Sales and Marketing Communications Products

      Connect

      Drive client engagement and streamline personalized, compliant communications from printing to leading-edge digital solutions.

       

       

       

  • Products
    TOPPAN MERRILL
    ConnectTM

    Connect helps drive client engagement and streamline personalized, compliant communications from printing to leading-edge digital solutions.

    TOPPAN MERRILL
    BridgeTM

    A seamless SaaS solution built on the Microsoft® Office® platform, Bridge is an intuitive technology that makes disclosure content management easier, faster and more accurate.

  • Resources
    •  
       

      Insights & Analysis

      Events

      SEC Resources

      XBRL Resources

      SEC EDGAR Resources, Definitions, and Processes

      Regulatory Compliance Glossary

       

       

       

toppan merrill
  • Capital Markets Transactions
    • Overview
    • Equity, Debt & IPO Offering Management Services
    • M&A
  • Regulatory Disclosure
    • For Corporations

      • Overview
      • Annual Meeting and Proxy Statement Solutions
      • Periodic & Interim Reporting
        • EDGAR & iXBRL for SEC Filings (US-GAAP & IFRS)
        • iXBRL for ESEF Filings
        • SEDAR Filings
        • Section 16 Filings
        • Automated SOX Compliance
    • For Investment

      • Overview
      • Prospectus for Investment Management
      • Periodic & Interim Reporting for Investment Management
        • Component Content Management & Output
        • Website Document Hosting
        • Shareholder Preference Center
        • Portfolio Specific Document Management for Variable Products
  • Sales & Marketing Communications
    • Overview
    • Offerings

      • Omni-Channel Communications
      • Document Creation & Management
      • Sales Enablement
      • ADA Services
      • Fulfillment & Distribution
      • Printing Services
    • Industries

      • Financial Services
      • Health Insurance
      • Dynamic Publishing for Health Insurance
  • Products
    • Connect
    • Bridge
    • SOX Automation
  • Resources
    • Insights & Analysis
    • Events
    • SEC Resources
    • SEC EDGAR Resources
    • XBRL Resources
    • glossary
  • Insights & Analysis
  • About Us
  • Contact
  • Client Login
    • Toppan Merrill BridgeTM
    • Content Control
    • My Workspace
    • Form N-MFP Online
    • Toppan Merrill Document Delivery
    • Toppan Merrill Insurance Solutions
    • Section16Direct
 

What is a SPAC? The difference between a traditional IPO and a SPAC IPO.
By Toppan Merrill on 13 July, 2021
1 min read | Industry Insights Insights Home

SPAC Blogpost visual

A Special Purpose Acquisition Company Initial Public Offering (SPAC IPO) raises capital to combine with a private company to take that company public. The SPAC, oftentimes called a Blank Check Company, is typically lead by seasoned private equity, venture capital, asset management professionals skilled in buying and selling companies. The majority of these shell companies are created with a specific vertical market target in mind, like biotech, electronic vehicles or technology. If a target company isn’t already in the cross hairs, then the SPAC team has a fairly short window of time, typically 18-24 months, to complete an acquisition or request an extension or the funds (which are held in an interest-bearing trust account) must be returned to the investors. In either case, at the onset investors don’t know what company they eventually may be investing in.

What is the difference between a SPAC IPO and a traditional IPO?

A SPAC IPO is different than a traditional Initial Public Offering (IPO). A SPAC IPO is formed to raise capital for a future acquisition; because a SPAC has limited business operations it has a little information for the Securities Exchange Commission (SEC) to review. Because of that, SPACs can be formed and go public in a matter of months whereas an operating company may take anywhere from nine months to several years to go public when including the required preparations. And because the SPAC and target company agree on the transaction and the price, there’s less price volatility for the target company.

What is the lifecycle of a SPAC IPO?

A Special Purpose Acquisition Company Initial Public Offering (SPAC IPO) has a relatively short life span with 5 distinct phases in its lifecycle:

  1. Formation: SPAC IPOs are typically formed by a financial sponsor or sponsor team (often private equity, venture capital, asset management professionals skilled in buying and selling companies) who fund the initial business operations to launch the IPO.
  2. Initial Public Offering: SPAC IPO seeks investors and raises capital to be held in a trust account to purchase a private company.
  3. Acquisition Identification: The SPAC’s sole purpose is to identify and bring a private company, public.
  4. Acquisition Purchase: Once the SPAC has identified the target, its management negotiates with the operating company and, if approved by SPAC shareholders, executes the business combination through SEC filings and approval.
  5. Exit: Private company completes the merger and emerges as a public company.

As mentioned previously, capital, less operating expenses and management fees, is typically held in a trust account while the SPAC team searches for their target acquisition. Once the SPAC finds its target company, it enters the De-SPAC transaction phase of its lifecycle. The first step in this phase are SEC filings. The SPAC will perform numerous SEC filings announcing the transaction followed by the merger documents (Form S-4, Form F-4 or Special Merger Proxy). The proxy statement/prospectus must contain detailed financial statements of the SPAC and the target company, a description of the post-merger company, its management team, governance structure, share information and more. The SEC conducts a review typically lasting 2-3 months before issuing a notice of effectiveness. SPAC Shareholders will then be solicited to approve the purchase of the targeted company or exercise the option to redeem their pro rata shares. Once approved, the new company will file a Super 8-K within 4 business days of the merger to give notice of the completion of the merger.

What if the SPAC IPO underestimated the amount necessary to acquire its target company?

If the SPAC needs additional capital, it can arrange equity or debt financing through a vehicle known as a Private Investment in a Public Company (PIPE) commitment where private investors purchase securities at a preferred rate.

Once the De-SPAC process is completed, the successor company must operate as a public company and follow SEC reporting and disclosure requirements.

What if the SPAC fails to find a target company to acquire?

If the SPAC does not complete an acquisition within the agreed upon time frame (typically 18-24 months) the SPAC may request an extension from its shareholders or is liquidated and its funds, which were held in a trust account, are returned to its investors.

Why are there so many SPAC IPOs recently?

The number of traditional IPOs and mergers and acquisitions are all up thanks to a booming stock market; but they pale in comparison to the meteoric rise of the SPAC IPOs in the last 18 months. SPACs are relatively easier to accomplish than a traditional IPO. In a traditional IPO, the private company must prepare for the event, solicit investors to execute the transaction and is exposed to share price volatility. Going public has significant regulatory hurdles and the process can take a significant amount of time - and money. The SPAC IPO literally turns the process around by creating large investor groups who provide capital upfront to be used to take a company public. And a successful SPAC transaction can mean significant financial returns for the sponsors.


Additional insights on SPACs:

The Year of the SPAC>>

5 Things You Need to Know About SPACs>>

SEC Provides SPACtacular Disclosure Guidance>>

SPACs Are Booming – So What Does the Future Hold?>>

10 Considerations for Going Public with a SPAC>>

SPAC Odyssey 2021: SOX Compliance for New Issuers>>

SPAC Transactions Continue to Draw SEC’s Attention>>

Emergence of the SPAC Option For Private Company IPOs>>

What is an Initial Public Offering?>>

Share

Share on twitter Share on linkedin Share on facebook
Previous ArticleSEC Sets Forth Regulatory Initiatives for the Next Year
Next ArticleFive Steps to Integrate Print and Digital Communications: Integrated Marketing Strategy (Part 2)

Subscribe

Subscribe

Subscribe

Subscribe

Toppan Merrill


Toppan Merrill, a leader in financial printing and communication solutions, is part of the Toppan Printing Co., Ltd., the world's leading printing group, headquartered in Tokyo with approximately US$14 billion in annual sales. Toppan Merrill has been a pioneer and trusted partner to the financial, legal and corporate communities for five decades, providing secure, innovative solutions to complex content and communications requirements. Through proactive partnerships, unparalleled expertise, continuous innovation and unmatched service, Toppan Merrill delivers a hassle-free experience for mission-critical content for capital markets transactions, financial reporting and regulatory disclosure filings, and marketing and communications solutions for regulated and non-regulated industries. With global expertise in major capital markets, Toppan Merrill delivers unmatched service around the world.


toppanmerrill.com


Show more posts from author

SEC; Capital Markets & Compliance; sec filing; IPOs; SEC updates; EDGAR; SPAC;
 

Expert Support

The best-in-class partner for complex, secure communications. Contact Toppan Merrill today.

Contact Us

Subscribe to the Toppan Merrill Blog

Gain actionable insight on industry trends, best practices & successful strategies to help your business.

Subscribe

Blog Categories

  • Industry Trends
  • Shareholder Communications
  • 40 Act SEC Regulations
  • Digital Communications
  • Toppan Merrill Connect
  • Content Management
  • Print/Fulfillment

Blog Categories

  • Industry Trends
  • Shareholder Communications
  • 40 Act SEC Regulations
  • Digital Communications
  • Toppan Merrill Connect
  • Content Management
  • Print/Fulfillment

Blog Categories

  • Member Communications
  • Section 508 Compliance
  • Digital Communications
  • Toppan Merrill Connect

Blog Categories

  • Industry trends
  • Shareholder communications
  • 40 act SEC regulations
  • Digital communications
  • Toppan Merrill connect
  • Content management
  • Print/fulfillment

Most Popular Articles

Most Popular Articles

Most Popular Articles

Most Popular Articles

Regulatory Resources

  • SEC Resources
  • EDGAR Resources
  • XBRL Resources

Toppan Merrill Corporate Video

2022 Compliance Calendar

Toppan Merrill 2022 Compliance Calendar_DIGITAL_Page_01
Download

2022 Interactive Digital Compliance Calendar

2022 Interactive Digital Compliance Calendar

View Calendar

Regulatory Resources

  • SEC Resources
  • EDGAR Resources
  • XBRL Resources

Get Your Life Back

Learn More

Toppan Merrill Corporate Video

2022 COMPLIANCE CALENDAR

Toppan Merrill 2022 Compliance Calendar_DIGITAL_Page_01
Download

2022 Interactive Digital Compliance Calendar

2022 Interactive Digital Compliance Calendar

Download
Get Your Life Back
Learn More
Toppan Merrill Corporate Video

Regulatory Resources

  • SEC Resources
  • EDGAR Resources
  • XBRL Resources

Toppan Merrill Corporate Video

2022 COMPLIANCE CALENDAR

Toppan Merrill 2020 Compliance Calendar_DIGITAL_Page_01
Download

2022 Interactive Digital Compliance Calendar

2022 Interactive Digital Compliance Calendar

Download

Latest Blogs

Latest Blogs

Latest Blogs

Latest Blogs

ToppanMerrill logo

Expand Possible.

twitter linkedin

Solutions

  • Capital Markets Transactions
  • Regulatory Disclosures for Corporations
  • Regulatory Disclosures for Investment Management Companies
  • Financial Services Marketing & Communications
  • Health Insurance Marketing & Communications
  • Election Services

Technologies

  • Toppan Merrill Connect™
  • Toppan Merrill Bridge™

Blog

  • Insights

About Toppan Merrill

  • About Toppan Merrill
  • Operating Principles
  • Careers

Get In Touch

  • Contact Us

TERMS OF USE | PRIVACY NOTICE | TOPPAN MERRILL SERVICES AGREEMENT | TOPPAN MERRILL SUPPLIERS | GLOSSARY

© Toppan Merrill 2022

ToppanMerrill logo
Expand Possible.
` twitter linkedin
Solutions
  • Capital Markets Transactions
  • Regulatory Disclosures for Corporations
  • Regulatory Disclosures for Investment Management Companies
  • Financial Services Marketing & Communications
  • Health Insurance Marketing & Communications
  • Election Services
Technologies
  • Toppan Merrill ConnecTM
  • Toppan Merrill BridgeTM
BLOG
  • Insights
About Toppan Merrill
  • About Toppan Merrill
  • Operating Principles
  • Careers
Get In Touch
  • Contact Us

TERMS OF USE | PRIVACY NOTICE | TOPPAN MERRILL SERVICES AGREEMENT | TOPPAN MERRILL SUPPLIERS | GLOSSARY

© Toppan Merrill 2019