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Ya, and paying your taxes can be a long and arduous process too. That doesn't mean it's ok to just skip all the hard work. Going public is not difficult "just

by jjeaff 4y ago

Ya, and paying your taxes can be a long and arduous process too. That doesn't mean it's ok to just skip all the hard work. Going public is not difficult "just because". It's difficult because there are a lot of reporting and due diligence and research and compliance required before your company is opened up to the public market for investment. It's there to keep garbage companies like Truth Social from going public and bilking unsophisticated investors of their money. It seems to me that a spac is just a technically legal way to get around the spirit of the law.

yreg 4y ago
I didn't say it's ok to do _because_ traditional IPO is troublesome. It is ok to do because it is ok to do according to the regulators. What I said is that there are legitimate reasons to use a SPAC vehicle, reasons other than pulling a scam on the investors.
- hef19898 4y ago
  It seems, so, that a lot of those legitimate reasons come down, in practical terms, to actually pulling a scam on retail investors.
- leereeves 4y ago
  The reasons why a company might want to skip the IPO process are obvious. But what's the advantage to the other side of the deal, the new investors?
  - aetherson 4y ago
    The advantage that your parent poster is suggesting is that the company that they've invested in spends more time and energy providing returns in their investment, and less time and energy jumping through arbitrary hoops. This increases the odds of good return.
    - leereeves 4y ago
      > This increases the odds of good return. Does it? The linked article says otherwise: "the extremely poor performance of SPACs that have completed deals during the last two years which has damaged market perceptions of going public by merging with a SPAC".
      - aetherson 4y ago
        I'm personally agnostic, but you seemed to not understand what the other poster was saying, so I'm helping you. It seems to be not particularly hard to imagine having a principled belief that SPACs can be used legitimately for shareholder return, but that they also have recently been used indiscriminately, and that the right thing to do is be more careful about when you use this tool, not to forswear using the tool.
        leereeves 4y ago
        I understood just fine, yreg pointed out advantages to the company. You're doing the same, just reframing it as if advantages to the company are really advantages to public investors. But those "arbitrary hoops" help protect public investors. How can investors "be more careful" if the information they need to make a careful decision isn't available or verified? SPACs seem to be asking investors to invest based solely on faith in the SPAC management. Ackman's collected $4B without even choosing a company to invest in.
        aetherson 4y ago
        If you partially own a company, the advantage to the company is partially your advantage. You appear to be trying to imply that the regulations and practices around going public are an unconditional good, in all cases, for all new investors in the company. That seems... very black and white. Have you ever been heavily involved in an IPO? I want to be clear, I'm not saying that what's involved in going public is an unconditional negative -- but there's definitely friction that you pick up. Things that might be tuned too strictly, at least for your company, or that might make sense for other companies but are an arbitrary hoop for yours. Or well-intentioned rules and practices that just aren't accomplishing their intents. If we say, in the universe of all companies going public, could some of them be materially helped by having a SPAC create a bespoke process for you in terms of how you go public, rather than the cookie cutter template? I mean, sure. And is that compatible with the idea that most SPACs today don't add much value? Also sure. What's the balance of the situation on the ground? I don't know. I'd be dubious of SPACs right now, without dismissing the idea that in the right circumstances, they can be helpful.
  - tlb 4y ago
    They can get in on a company much earlier than if it took the time to IPO. This gives higher risk and higher (expected) reward.
    - leereeves 4y ago
      Higher reward because the SPAC pays a lower price than the IPO price? That seems to be against the interests of the company and the current investors, who want to get as much as possible from public investors, so I'm skeptical. Or higher reward because the eventual price would be higher after an SPAC acquisition? I don't see why that would be true a priori, so what's the evidence?

by jjeaff 4y ago

yreg 4y ago

I didn't say it's ok to do _because_ traditional IPO is troublesome. It is ok to do because it is ok to do according to the regulators. What I said is that there are legitimate reasons to use a SPAC vehicle, reasons other than pulling a scam on the investors.

hef19898 4y ago
It seems, so, that a lot of those legitimate reasons come down, in practical terms, to actually pulling a scam on retail investors.
leereeves 4y ago
The reasons why a company might want to skip the IPO process are obvious. But what's the advantage to the other side of the deal, the new investors?
- aetherson 4y ago
  The advantage that your parent poster is suggesting is that the company that they've invested in spends more time and energy providing returns in their investment, and less time and energy jumping through arbitrary hoops. This increases the odds of good return.
  - leereeves 4y ago
    > This increases the odds of good return. Does it? The linked article says otherwise: "the extremely poor performance of SPACs that have completed deals during the last two years which has damaged market perceptions of going public by merging with a SPAC".
    - aetherson 4y ago
      I'm personally agnostic, but you seemed to not understand what the other poster was saying, so I'm helping you. It seems to be not particularly hard to imagine having a principled belief that SPACs can be used legitimately for shareholder return, but that they also have recently been used indiscriminately, and that the right thing to do is be more careful about when you use this tool, not to forswear using the tool.
      - leereeves 4y ago
        I understood just fine, yreg pointed out advantages to the company. You're doing the same, just reframing it as if advantages to the company are really advantages to public investors. But those "arbitrary hoops" help protect public investors. How can investors "be more careful" if the information they need to make a careful decision isn't available or verified? SPACs seem to be asking investors to invest based solely on faith in the SPAC management. Ackman's collected $4B without even choosing a company to invest in.
        aetherson 4y ago
        If you partially own a company, the advantage to the company is partially your advantage. You appear to be trying to imply that the regulations and practices around going public are an unconditional good, in all cases, for all new investors in the company. That seems... very black and white. Have you ever been heavily involved in an IPO? I want to be clear, I'm not saying that what's involved in going public is an unconditional negative -- but there's definitely friction that you pick up. Things that might be tuned too strictly, at least for your company, or that might make sense for other companies but are an arbitrary hoop for yours. Or well-intentioned rules and practices that just aren't accomplishing their intents. If we say, in the universe of all companies going public, could some of them be materially helped by having a SPAC create a bespoke process for you in terms of how you go public, rather than the cookie cutter template? I mean, sure. And is that compatible with the idea that most SPACs today don't add much value? Also sure. What's the balance of the situation on the ground? I don't know. I'd be dubious of SPACs right now, without dismissing the idea that in the right circumstances, they can be helpful.
- tlb 4y ago
  They can get in on a company much earlier than if it took the time to IPO. This gives higher risk and higher (expected) reward.
  - leereeves 4y ago
    Higher reward because the SPAC pays a lower price than the IPO price? That seems to be against the interests of the company and the current investors, who want to get as much as possible from public investors, so I'm skeptical. Or higher reward because the eventual price would be higher after an SPAC acquisition? I don't see why that would be true a priori, so what's the evidence?