Special Purpose Acquisition Corporation (SPAC)

The Amex has established itself as a leader in the listing of Special Purpose Acquisition Corporations (SPAC):

• 50 SPACs have listed on the Amex to date
• 7 Billion dollars of capital has been raised

Some of the underwriters that have participated in SPACs listed on the Amex are Citigroup, Deutsche Bank, Merrill Lynch and Maxim Group.

What are SPACs?

A SPAC is a newly formed corporation by prominent and qualified sponsor/management teams for the purpose of raising capital in an IPO. The goal is to identify and consummate a business combination with a private company within an industry or geographic location. A SPAC seeks to leverage the strengths and recognition of the management team to identify attractive acquisition candidates.

SPAC Advantages:

Liquidity
• Public shareholders are able to sell their securities in the open market

Shareholder approval on the acquisition
• The shareholders have the right to approve or reject the business combination. Typically 80% of the shareholders must approve the acquisition in order for transaction to be accepted.

High private equity fund interest
• Access to investments in acquisitions and buy-outs typically restricted to private equity funds.

The capital raised is held in escrow pending approval of a business combination
• If a deal is not consummated in a specific period of time or if the shareholders reject the transaction, the funds are returned to the shareholders with interest.