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Special purpose acquisition companies (SPACs) have exploded as an alternate vehicle to take a company public without undergoing the same rigor as the traditional IPO process. The number of SPAC IPOs during 2020 was nearly four times the 2019 total, and the first quarter of 2021 alone has already eclipsed the record high 2020 totals.
Given the proliferation of SPACs, the regulation and oversight around this ecosystem will likely continue to increase. In April, the SEC issued new guidance related to SPAC warrant liability accounting and valuation. As a result, the SEC effectively halted all in-progress offerings, business combinations and new IPO filings until SPACs resolved the accounting and related valuation questions with respect to their warrants issued.
In this special edition of Valuation Insights, we provide an overview of the SPAC market and highlight the benefits and risks associated with de-SPAC transactions. In addition, we address a number of important financial reporting, tax and valuation considerations for SPACs: from valuing founder shares and other SPAC investments to transfer pricing considerations and risks associated with acquisitions of target companies with international operations and related party transactions involving spin outs.
In every issue of Valuation Insights, you will find industry market multiples that are useful for benchmark valuation purposes.
Be sure to check out our library of CPE-eligible virtual events and webcasts, where our valuation experts discuss issues and topics that may be impacting your business.
We hope that you will find this and future issues of the newsletter informative.
SPAC Market Overview
by Robert A. Bartell, CFA
Valuing Founder Shares and other SPAC Investments
by David Larsen
SPACs and Valuation of Warrant Liabilities
by Louisa Galbo
Transfer Pricing for SPACs
by Susan Fickling