A special purpose acquisition company (SPAC) transaction is an alternative approach to take a private company public. Commonly referred to as “blank check” companies, SPACs raise funds through an initial public offering (IPO) and search for a “target” company to acquire, and often raise additional funding for the deal through private investment in public equity (PIPE). When that target company merges with the SPAC, it becomes a public company.
While executing a traditional IPO can take several months or years to complete, a SPAC transaction can be completed in as few as three or four months. As a result of this compressed timeline, executives and board members of the newly formed public company have to quickly prepare to meet the financial, reporting, tax, and other requirements of a public company. Leadership teams and C-suite executives, most notably CFOs, need to focus on six key areas in the days following a SPAC merger. This includes: finance and accounting; corporate governance; internal processes and controls; information technology; cyber capabilities; and tax. Following is a synopsis of crucial components in each area.