Earning the premium: A recipe for long-term SPAC success

SPAC sponsors file with the US Securities and Exchange Commission (SEC) just like any other IPO does, raise capital and place it in a trust, and publicly list their shares. [...]SPACs offer protections, such as the right of an investor to withdraw capital with interest at the time of a proposed busi...

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Bibliographic Details
Published inMcKinsey Insights
Main Authors Chauviere, Kurt, Tan, Tao
Format Magazine Article
LanguageEnglish
Published New York McKinsey & Company, Inc 23.09.2020
Subjects
Acquisitions & mergers
Corporate sponsorship
Equity
Fund raising
Initial public offerings
Investments
Leadership
Regulatory reform
Roles
Stockholders
Success
United States > US
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Summary:SPAC sponsors file with the US Securities and Exchange Commission (SEC) just like any other IPO does, raise capital and place it in a trust, and publicly list their shares. [...]SPACs offer protections, such as the right of an investor to withdraw capital with interest at the time of a proposed business combination, which essentially creates a riskless “free option.” In a typical $300 million SPAC, a 20 percent increase in stock price in the first year after combination can yield a double-digit multiple of up-front capital. [...]operators have helped drive outperformance starting from the SPAC’s IPO and continuing throughout the combination’s life cycle.
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