Actionable Ideas for Companies and Sponsors

SPACs Come of Age as an Acquiror of Choice

Year-to-date, SPACs have announced 62 acquisitions representing $82 billion in transaction value and SPACs are increasingly pursuing larger targets. In addition, many companies contemplating exits are pursuing targeted “SPAC-only” M&A processes. Recently, Jefferies advised (1) Luminar Technologies, a leader in automotive LiDar technology, in its $2.9 billion sale to Gores Metropolous’ SPAC; and (2) Skillz, which operates an e-sports platform, in its $3.5 billion sale to Flying Eagle Acquisition Corp., both of which pursued a SPAC-only M&A process.

These trends reflect the inherent advantages of SPACs as an acquiror, which are that (i) SPACs provide liquidity to selling shareholders while also allowing participation in future upside through share price appreciation, (ii) SPACs allow growth-oriented companies to put much needed capital on the balance sheet through a combination of the initial SPAC raise and transaction-related PIPEs, and (iii) SPAC M&A proxy documents allow the disclosure of forward-looking projections, enabling equity investors to place a well-informed value on the post-transaction company.