Special Purpose Acquisition Company (SPAC)

A special purpose acquisition company (SPAC) has no commercial operations, formed strictly to raise capital through an initial public offering (IPO) for acquiring or merging with an existing company. This approach offers several advantages over a traditional IPO, such as providing access to capital even when market volatility and other conditions limit liquidity. SPACs could also potentially lower transaction fees as well as expedite the timeline to become a public company.

However, the merger of a SPAC with a target company presents several challenges, including meeting an accelerated public company readiness timeline and complex accounting and financial reporting/registration requirements that may differ based upon the lifecycle of the SPAC involved.