When a company is taken public using a SPAC — which stands for Special Purpose Acquisition Company — the process may seem similar to a merger. While there are many similarities, there are also a few ways that the de-SPAC process differs from a merger. In short, a de-SPAC transaction is defined as a company merger involving a SPAC, a buying entity and a target private business. Learn the process, timeline and requirements for the de-SPAC transition to prepare the business and the documentation that's needed.

Special purpose acquisition companies (SPACs) offer an alternative path to the IPO when taking a company public. Below, we’ll answer the question, “What is a special purpose entity?” along with covering the SPAC process and why more business leaders are choosing this option when taking their companies public in the present market.

1Q21 was record breaking with 298 SPACs raising ~ $88 billion* excluding over-allotments. 2021 has already surpassed 2020's record year by deal value and volume. Aside from the historical number of SPAC IPOs, 24 business combinations completed, and 94 SPACs announced their target in the quarter, lending to what will be a record year for De-SPACs.

The special purpose acquisition company (SPAC) market has boomed over the past several years, with continued increases in IPO activity and record completions of de-SPAC transactions. More than 50% of total IPOs in 2020 were SPACs, this represents a 4x increase from the previous year. As of March 25, 2021, 445 SPACs have filed with the SEC with 296 SPACs pricing, raising over $89 billion*. This surpasses 2020's record number of 248 SPACs raising over $76 billion* for the full year of 2020.

Will 2021 Be a Good Year for U.S. Markets?

Despite the pandemic, 2020 was the biggest year for IPOs since 2014, and I am confident that the positive trend will continue for IPO stocks in 2021. It’s already getting off to a fast start with the Wall Street debut of mobile game developer Playtika Holding (PLTK), which benefits from strong videogame demand and a popular lineup of titles like Slotmania, Bingo Blitz, and Board Kings.

Investment Outlook: 2021 Looks Bright – a blog by Craig Clay, President of Global Capital Markets, DFIN

Despite the pandemic, 2020 was the biggest year for IPOs since 2014, and I am confident that the positive trend will continue in 2021.

2020 Review and 2021 Outlook – an exclusive interview with Craig Clay, President of Global Capital Markets, DFIN with DealStreetAsia

In conversation with DealStreetAsia (DSA), Craig Clay, President of Global Capital Markets, DFIN discussed how the US election will impact dealmaking, the rise of SPACs, virtual due diligence and how having a risk and compliance solutions partner can smoothen the path to an IPO and beyond. Here are some excerpts from the interview:

The formation of a SPAC, by its very nature, requires equal measures of speed, accuracy, and minimal costs  to properly launch and position the company for ultimate success. Missteps impacting any one of the deal-making triad can lead to irreversible repercussions and to lost opportunities – and that’s during smooth economic conditions.

SPAC Transactions

The numbers alone speak volumes. As of mid-September 2020, 95 SPACs (special purpose acquisition companies) with a valuation of approximately $35 billion had priced year to date, shattering “all previous records,” said Craig Clay, President of Global Capital Markets for Donnelley Financial Solutions. In contrast, he said, for the full year of 2019, 59 SPACs had priced, and even this represented a sizeable increase over 46 in 2018 and 34 in 2017.