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<blockquote data-quote="Manifesting" data-source="post: 66866" data-attributes="member: 7645"><p>I would say that for companies seeking to go public via a SPAC merger, this process also offers certainty about price and about the deal going through. Whereas with an IPO, investment bankers can only offer you a range for value of your shares and things can go all sorts of ways depending on market appetite (and there is possibility of your IPO to get pulled too).</p><p></p><p>Another thing that explains their popularity as a fundraising tool for companies is that you are able to use projections instead of just historical data to really <em>wow</em> the SPAC investors, who have to vote to approve the merger. For high-growth, scalable companies who haven’t really made money yet, this can be a huge plus as they can appear more attractive.</p><p></p><p>In a traditional IPO process, it is customary not to use projections and to only rely on historical data when marketing to investors (and </p><p>generally keep company executives out of the spotlight during this time). In the US, the SEC provides a safe harbor for companies to use projections but still, due to fears of litigation, the convention is not to use them.</p><p></p><p>For investors, SPACs are super attractive because if they don’t like the company the SPAC is merging with, they can walk away with their money with interest. (Also, when you invest in a SPAC you also also receive an option to buy more stock at a fixed price, and this warrant can be traded and serve as another source of value for an investor.) In the UK, the rules are less investor-friendly. Basically, if I understand it correctly, shares have to be suspended once a deal is announced and investors can only resume trading once the deal is done. So essentially, you might find yourself locked into a deal you might not like, which explains why SPACs have not boomed in the same way as in the US.</p></blockquote><p></p>
[QUOTE="Manifesting, post: 66866, member: 7645"] I would say that for companies seeking to go public via a SPAC merger, this process also offers certainty about price and about the deal going through. Whereas with an IPO, investment bankers can only offer you a range for value of your shares and things can go all sorts of ways depending on market appetite (and there is possibility of your IPO to get pulled too). Another thing that explains their popularity as a fundraising tool for companies is that you are able to use projections instead of just historical data to really [I]wow[/I] the SPAC investors, who have to vote to approve the merger. For high-growth, scalable companies who haven’t really made money yet, this can be a huge plus as they can appear more attractive. In a traditional IPO process, it is customary not to use projections and to only rely on historical data when marketing to investors (and generally keep company executives out of the spotlight during this time). In the US, the SEC provides a safe harbor for companies to use projections but still, due to fears of litigation, the convention is not to use them. For investors, SPACs are super attractive because if they don’t like the company the SPAC is merging with, they can walk away with their money with interest. (Also, when you invest in a SPAC you also also receive an option to buy more stock at a fixed price, and this warrant can be traded and serve as another source of value for an investor.) In the UK, the rules are less investor-friendly. Basically, if I understand it correctly, shares have to be suspended once a deal is announced and investors can only resume trading once the deal is done. So essentially, you might find yourself locked into a deal you might not like, which explains why SPACs have not boomed in the same way as in the US. [/QUOTE]
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