4 ms·
I think you’re conflating the SPAC sponsors and the owners of the public equity. The owners of the equity get their money back (plus interest) if the SPAC doesn
by nocoiner 3y ago
I think you’re conflating the SPAC sponsors and the owners of the public equity. The owners of the equity get their money back (plus interest) if the SPAC doesn’t find a target. The sponsors are out whatever money they put up to form the SPAC, take it public and search unsuccessfully for a target. The sponsors do typically have very rich upside if they find a deal - like, 20% of the post-merger company - but it’s not a risk-free thing for them.
Don’t get me wrong, I think SPACs are fucking stupid and bad for retail investors and I would never want to be involved in one, but the pre-deal owners of shares of the SPAC are actually fairly decently protected (opt-out rights, money held in trust, not liable for SPAC expenses).
- Lazare 3y agoI agree with your overall point, but I would note that US security regulation focuses heavily on disclosure as a mechanism to protect investors, and the owners of pre-deal SPAC shares are not well protected in that regard. It's good that they get to decide if they want their money back; it's bad they they're required to make that decision with so little information.