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Editorials

 

SPACs — Money Goes Public

 

In times of low inte­rest rates, inves­tors are looking for new forms of invest­ment. Recently, Special Purpose Acqui­si­tion Compa­nies (herein­af­ter refer­red to as “SPAC”) have become very popu­lar. These are listed compa­nies that only hold cash and are there­fore often refer­red to as “blank check compa­nies”. Over a period of 18 to 24 months a target company is sought with which SPAC will merge.2The target company may have its regis­tered office in Germany or abroad. In 2020, there were about 250 SPACs listed on the stock exchange with a total value of $79 billion; in Janu­ary 2021, their value incre­a­sed by $40 billion.3 Inte­rest in SPACs is growing, parti­cu­larly in the USA, while Euro­pean inves­tors are still reluc­tant. Hund­reds of SPACs are curr­ently looking for compa­nies to acquire, with appro­xi­mately 400 in the US.4Thepassage of a later opera­ting company to the capi­tal market, howe­ver, brings with it not only oppor­tu­nities but also chal­len­ges, espe­cially for the target company. The following comments high­light the requi­re­ments and chal­len­ges of a SPAC tran­sac­tion and provide an over­view of deve­lo­p­ments in the German environment.

I. Reasons for the emer­gence of SPACs

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