SPACs have a number of benefits that have led private equity sponsors to use them to raise capital
- A SPAC is a unique financial tool for raising institutional capital for acquisitions based solely upon the expertise of an executive team.
- A SPAC IPO raises capital relatively quickly, typically taking four months from start to finish.
- A SPAC with cash has advantages in a global market characterized by debt.
- As a public company, a SPAC has comparative advantages in making acquisitions. SPACs may conclude larger acquisitions by using its stock as currency, and raising additional equity and debt by virtue of its public company status.
- SPACS offer private equity sponsors with liquidity and an exit strategy, and founders with substantial equity in the company in exchange for their talent and expertise.
- Risk is minimized for a sponsor, with cash held in trust, and risk linked directly to the SPAC’s successful acquisition(s).
Gregory Gaylor's comment:
A SPAC IS AN EQUITY IPO AIMED AT RAISING CAPITAL TOWARDS AN ACQUISITION
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