SPACs, de-SPACs and listed acquisition vehicles

SPACs, de-SPACs and listed acquisition vehicles

SPACs and listed acquisition vehicles offer an alternative route to a public market transaction. Instead of a traditional IPO by an operating company, a listed acquisition vehicle raises capital and later seeks to acquire or merge with a target business.

The current page explains the basic SPAC concept: a listed company without operating activities raises capital and then seeks to combine with a private company. For your current practice, this page should be broadened beyond SPAC hype and positioned around listed acquisition structures, de-SPAC transactions, reverse listings and capital markets-related M&A.

These transactions sit at the intersection of Dutch M&A, Dutch private equity, Dutch equity financing and governance.

SPAC and de-SPAC transactions

A SPAC is typically formed to identify and acquire a target business within a specified period. The business combination is often referred to as a de-SPAC transaction. For the target, this can create an alternative route to a listing, financing or strategic transaction.

The legal work is not limited to the listing vehicle. It also involves acquisition structuring, shareholder approvals, disclosure, governance, lock-ups, sponsor economics, investor rights, valuation, due diligence, financing and post-combination arrangements.

Reverse listings and alternative listing routes

In some situations, a company may consider a reverse listing or other listed-company transaction as an alternative to a traditional IPO or private sale. These routes can be attractive but also carry execution risk, market risk and governance complexity.

For founders, investors and shareholders, the key question is whether a listed-company route provides better value, liquidity, timing or strategic optionality than a private M&A transaction or private funding round.

Relevance for international clients

International clients may encounter Dutch SPAC or listed acquisition structures where a Dutch entity is used as holding company, target company, acquisition vehicle or post-combination structure.

Relevant issues include the Dutch corporate structure, share issuance mechanics, shareholder approvals, governance arrangements, lock-ups, investor protections, disclosure, earn-outs and the interaction between transaction documentation and public-market expectations.

If disputes arise after the transaction, they may connect with Dutch M&A disputes, Dutch directors’ liability or Dutch shareholder disputes.

Strategic considerations

SPACs and listed acquisition vehicles should be assessed as part of the wider financing and exit strategy. Relevant questions include whether the target is ready for a public-market environment, whether governance is suitable, whether existing shareholders can obtain liquidity, whether sponsor and investor economics are balanced and whether the transaction can be executed within the required timetable.

In many cases, a private M&A sale, private equity transaction, strategic investment or private placement may be a better route. The legal strategy should therefore compare the listed-company route with alternative financing and exit options.

Legal support

Dirk de Waard advises companies, founders, investors, shareholders and M&A parties on SPAC-related transactions, de-SPACs, reverse listings, listed acquisition vehicles, private placements, shareholder arrangements and Dutch transaction structures.

Considering a SPAC, de-SPAC, reverse listing or listed acquisition structure involving a Dutch company?

Dirk de Waard is a partner at VentureLawyers and works with a dedicated team of M&A, venture capital and private equity lawyers. Contact Dirk via dirk.dewaard@venturelawyers.nl to discuss the Dutch legal structure, governance, transaction documentation and execution strategy.