Actionable Ideas for Companies and Sponsors
SPACs Have Evolved to Become Viable Acquisition Vehicles
The market has seen a significant return of SPAC issuance, with 44 SPACs raising over $11 billion of capital since 2015. So far in 2017, 11 SPACs have raised approximately $4 billion, which represents the highest dollar level of SPAC issuance since 2007. Year-to-date, the average issuance has been greater than $350 million, approximately 50% larger than the average over this same period last year. In addition, SPAC technology has improved from earlier structures, by largely eliminating the risk of an adverse shareholder vote, reducing dilution from founder shares and warrants, and increasing SPAC sizes to facilitate larger transactions. Finally, SPAC issuance is occurring across numerous industry sectors, including healthcare, media, entertainment and energy.
SPACs have also shown a proven ability to successfully complete acquisition transactions of size. For example in May 2017, CF Corp announced the $2.2 billion acquisition of Fidelity & Guaranty Life; in March 2017, Capital Acquisition Corp III announced a merger with GTCR-backed Cision, in which GTCR rolled 100% of its stake for a 68% ownership in the combined public company valuing Cision at $2.4 billion; and in February 2017, Quinpario Acquisition announced a merger with HGM-backed SourceHOV and Apollo-backed Novitex where Apollo and HGM both rolled 100% of their equity stakes for a combined majority control valuing the combined entity at $2.8 billion.