Partner Ralph De Martino was quoted on how companies engaged in mergers with special purpose acquisition companies (SPACs) can prepare for the process, including ensuring companies have the right elements in place to assure an effective transition to a public company and win the approval of SPAC shareholders.
Ralph said, “You want to make sure that your corporate house is in order. You need to be able to demonstrate to the SPAC that you're going to be in a position to move forward relatively quickly."
Since companies going public through a SPAC don’t have the traditional round of pre-IPO marketing events coordinated by underwriters, "The company needs to have very good and diligent IR and PR processes in place to try to offset the absence of that extended marketing process by an underwriting team," he added.
Another key component for a company using a SPAC is private investment in public equity (PIPE), a critical capital-raising element. However, even with a PIPE, the target business team should stay engaged in the process and hire a broker-dealer to advise on valuation and related financing matters.
"All those factors dovetail together," Ralph said. "You've got a lot going on at the same time, but preparation is key."
Read the full article here. (Subscription required)