Special Purpose Acquisition Company (SPAC) Readiness Checklist
Becoming a public company through acquisition by a special purpose acquistion company (SPAC) has increased in popularity over the last two years as an alternative to the traditional initial public offering (IPO) route. Although existing for decades, stable company valuations during recent economic uncertainty has reinvigorated the prevalence of SPACs for companies to raise capital. Private companies looking to be acquired by a SPAC may benefit from effectively analyzing the current state of operations, information technology and financial reporting processes against the various requirements for publicly traded companies to determine if they are adequately prepared for the quick transition. Once they go through an IPO, SPACs typically have between 18-24 months to seek a target company and complete the acquisition process, commonly known as “de-SPACing.” With the potential for immediate turnaround considered, target companies must consider their readiness in becoming a public company and effectively operate as such prior to the completion of the merger with a SPAC. The purpose of this checklist is to assist private companies in becoming a favorable acquisition target for SPACs from not only a financial, but overall operating perspective.