How is capital raised?
Equity capital is raised through a fully registered initial public offering.
Where are proceeds held?
- Approximately 100% of gross proceeds are held in trust pending consummation of a business combination.
- Liquidation of funds in trust to public shareholders if the SPAC fails to consummate a business combination within 18-24 months.
- Majority stockholder approval of business combination is required.
- Full disclosure to shareholders prior to vote.
- Shareholders have the right to receive the cash per share in trust if either:
- The shareholder votes against a transaction that is approved and requests conversion; or
- The SPAC fails to consummate a business combination in the allotted time (liquidation).
- Voting and conversion rights of public shareholders limit approval to only well-received transactions.
- Insiders receive approximately 20% of post-IPO shares, in many cases contingent on share appreciation.
- Provides a commitment to invest in a SPAC.
- Insiders’ shares are held to a one-year escrow.
- Insiders are not allowed to participate in liquidating distribution.