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Special Purpose Acquisition Companies

Where Alternative Investments &

Capital Markets Expertise Converge

SPACs are public companies formed for the purpose of raising capital and merging with or acquiring one or more businesses or assets in a Business Combination.  SPACs primarily raise capital via initial public offerings (“IPOs”).  At the time of an IPO, SPACs are limited in their ability to enter into discussions with potential business combination partners.  After an IPO, SPACs typically have 18 to 24 months to enter into definitive agreements with a partner and complete a Business Combination.  SPACs are often led by management teams with extensive public company or mergers and acquisition experience, or both, and in select cases are supported by the resources of leading asset management firms.

Special Purpose Acquisition Company (SPAC) Summary

In a typical IPO, SPACs sell public units which are comprised of a share of common stock and a warrant.  Subject to certain conditions, SPAC warrants allow holders to purchase additional common stock.  Units are typically separable into common stock and warrants at the holder’s option within 50-90 days of the IPO. 

Special Purpose Acquisition Company (SPAC) Structure


Proceeds raised at the time of a SPAC’s IPO are typically placed into a trust, where they are held as cash or invested in short-dated Treasury Bills.  SPAC trusts are typically administered by a third-party trustee.  Immediately after an IPO, the pro rata proceeds of a SPAC’s trust account typically equal 100% of a SPAC’s original public unit IPO price.

Prior to consummating a Business Combination, SPACs are typically required to provide shareholders the opportunity to redeem or tender their shares for a pro rata portion of the trust account.  SPACs must also generally seek shareholder approval to close a Business Combination.  If a SPAC does not close a business combination prior to the end of its search phase it must liquidate the trust, returning capital to public common stockholders and its warrants are generally retired worthless.


The SPAC structure, comprised of units and a trust account, have historically presented investors with a unique opportunity to generate compelling returns with strong downside protection.  SPAC investments have also historically exhibited limited correlation with broader equity markets. 

SPAC Outcomes Basic

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