Can SPACs Ensure M&A Success?

Abstract

Special purpose acquisition companies (SPACs) are created by a group of specialists to pool funds for financing future acquisitions within a specified time limit. SPACs are basically “shell” companies with no operations and business, assets or liabilities but they acquire the status of public corporations through initial public offerings (IPOs). The SPAC founders use the IPO funds to acquire a potential target. They are generally found to be successful to close an mergers & acquisitions (M&A) deal but they may not bother to ensure perpetual success of the acquired entity for a long time. In many countries, “shell” companies are characterized as the “bad boys” of the corporate world but they can be used for long-lasting successful M&As due to their inherent strengths, if they play the role of protagonists and “good guys” as SPACs. This chapter examines how SPACs can be used as special vehicles to ensure worthy and successful acquisitions to create sustainable corporations.

Citation

Ghosh Ray, K. and Ghosh Ray, S. (2017), "Can SPACs Ensure M&A Success?", Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 16), Emerald Publishing Limited, Leeds, pp. 83-97. https://doi.org/10.1108/S1479-361X20170000016005