This article is sponsored by Withum
In the first four months of 2021, SPACs accounted for more than 20 percent of all M&A volume in the US. While there was a slowdown in activity in Q2 2021, according to Withum financial services team leader Tom Angell, they’re likely to be a permanent fixture in the M&A market.
“There was an enormous increase in the number of SPACs at the end of 2020 and the first quarter of this year. While the volume of SPACs has decreased significantly since then, they are here to stay,” says Angell. “SPACs represent $700 billion to $1 trillion of buying power, and we expect them to remain significant in the market.”
Withum partner Fatema Raza says private equity and venture capital sponsors that are contemplating the idea of going public via a SPAC should keep accounting requirements in mind.
“The majority of these private companies currently only have GAAS or IFRS audits and they will need a PCAOB audit to go on the US exchanges,” Raza says. “There has been a lot of regulatory intervention in mergers and IPOs, and likely more to come. Extra scrutiny on SPACs could be welcomed because of the speed with which they’ve proliferated.”
Angell adds that “SPACs move quickly, so those companies need to build up their finance department and get some help, from early on in the process, with compliance and understanding PCAOB audits.”
Watch the full video to learn more and click here to watch Angell discuss the growth of private exchanges.