While a traditional IPO determines its pricing at the end of the process, SPAC sponsors and the operating company negotiate a price up front, offsetting the risk of market volatility and bad timing.

SPACs provide access to additional sources of capital. Compared to a traditional IPO, they also have the potential to enable a larger offering as a relative percentage of your company.

Some companies may not want to disclose information about business profits and strategies publicly until a deal has been reached. For them, the ability to price the deal in the beginning may be especially intriguing. IPOs typically involve roadshows, with CFOs and other C-suite executives courting prospective investors prior to pricing a deal. With a SPAC merger, however, businesses are not obligated to broadly share information until the general terms of a deal have been struck.

• Identify lead investment and M&A lawyers
• Develop forecasting model, develop story, and evaluate your company’s valuation
• Meet with potential SPAC suitors to gauge SPAC bake-off
• Identify an advisor to project manage the process and help develop the deal timeline
• Begin preparing Reg S-X/Reg S-K public company financial statements and footnotes and hire an auditor to perform an audit under PCAOB standards
• Begin tax planning strategies
  

Letter of Intent (LOI)

• Negotiate key deal terms, including earnout arrangements
• Agree on merger timeline with SPAC, advisors, and external auditors based on critical workstreams
• Conduct employee education and communication around the SPAC transaction and around being a public company

Private Investment in Public Equity (PIPE)

• Prepare PIPE presentation, including Key Performance Indicators (KPIs), identification of non-GAAP measures and reportable segments
• Facilitate diligence review by prospective PIPE investors
• Negotiate PIPE terms with potential investors
• Obtain definitive commitments for the PIPE concurrent with the execution of the business combination agreement (i.e., combined public announcement), if possible

SEC reporting considerations

• Analyze accounting treatment to determine accounting acquirer
• Determine accounting for existing share- based awards, convertible equity and debt, etc. and any related impacts based on definitive merger agreement
• Draft MD&A and market risk disclosures
• Prepare Form S-4/proxy information, including pro forma financial information for minimum and maximum redemption scenarios
• Respond to SEC comments and file Form S-4/A
  

Thriving as you transition from going public to being public

• Optimize finance and accounting operations to meet SEC reporting timelines
• Implement new technologies (e.g., Workiva, Blackline, NetSuite, etc.)
• Develop governance framework (e.g., Board and committee requirements)
• Refine tax strategy and risk management and controls
• Document organizational policies and procedures
• Advance Investor Relations (IR) strategy and organization capabilities
• Implement Sec 302/906 certification programs