Accounting and SEC Reporting Considerations for SPAC Transactions (Last Updated 11 April 2022)

Published on: Apr 11, 2022

On the heels of a record-breaking year in 2020, SPAC IPOs set a new record in 2021 by raising more than $160 billion in proceeds. Given the continuing success of SPAC transactions, many private operating companies have been merging with SPACs to raise capital rather than using traditional IPOs or other financing activities . As a result, the increased number of SPAC transactions has heightened the level of scrutiny by the SEC. On March 30, 2022, the SEC issued a proposed rule that would “enhance investor protections in IPOs by SPACs and in subsequent business combination transactions between SPACs and private operating companies [also known as de-SPAC transactions].” The objective of the proposed rule is to “more closely align the financial statement reporting requirements in business combinations involving a shell company and a private operating company [the “target” company] with those in traditional IPOs.”

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