The Fast Track IPO – Success Factors for Taking Firms Public with SPACs
51 Pages Posted: 11 Sep 2012 Last revised: 6 Jul 2014
Date Written: September 11, 2012
Special Purpose Acquisition Companies (SPACs) are shells initiated with the sole intent of acquiring a single privately held company. SPAC shareholders vote on this acquisition, and in this paper we identify the factors that affect approval probability. Surprisingly, the data indicate more experienced managers and boards do not enhance the probability of deal approval. Similarly, glamour underwriters and larger underwriter syndicates are less likely to be associated with successful SPACs. Further, we find a negative relation between the presence of active investor (hedge funds and private equity funds) shareholdings in a SPAC and approval probability.
Keywords: Alternative Asset, Reverse Merger, Shell Company, Special Purpose Acquisition Company (SPAC)
JEL Classification: G12, G24, G34
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