Special Purpose Acquisition Companies, or SPACs, have seen a resurgence in popularity since becoming all but extinct after the 2007-2008 financial crisis. These publicly-traded companies are formed with the sole purpose of raising capital to acquire one or more unspecified businesses. The management team that forms the SPAC (the “sponsor”) forms the entity and funds the offering expenses in exchange for founder’s shares.

Although the COVID-19 pandemic has caused significant economic hardship for most, SPAC deals have accelerated at record-breaking pace. For investors, SPACs are low risk as they can recoup finances, and the potential for returns are higher than ever given the access to capital, low interest rates, and the ability to move quickly to close an acquisition. This provides target companies with the potential to grow exponentially despite the economic downturn as companies seek access to additional capital. In 2020, SPACs are set to have their best year yet with $25.3 billion raised over 62 IPOs averaging the highest SPAC volume yet of $407.4 million – and that’s just through July.

BDO is dedicated to helping both sponsors and target companies navigate going public through Special Purpose Acquisition Companies. In the following series of articles, we’ll give an introduction outlining the current SPAC market and talk through tax, accounting, and valuation considerations to keep in mind.

BDO Knows SPACs Series

BDO Knows SPACs Part 1: Special Purpose Acquisition Companies as an Express Path to IPO

Accounting Considerations

BDO Knows SPACs Part 2: Accounting Considerations for SPAC Sponsors
BDO Knows SPACs Part 3: Accounting Considerations for Target Companies of Special Purpose Acquisition Companies

Tax Considerations

BDO Knows SPACS Part 4: Tax Treatment of SPAC Founder Shares
BDO Knows SPACS Part 5: Tax Considerations for Choosing the Jurisdiction of the SPAC
BDO Knows SPACS Part 6: Tax Treatment of Transaction Costs and Start-Up Expenses
BDO Knows SPACs Part 7: Treatment of Tax Attributes for Special Purpose Acquisition Companies

Industry Insights

Life Sciences Companies and the SPAC Advantage


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