The Lifecycle of a SPAC

A SPAC goes through various steps and stages throughout its lifecycle. This post outlines the steps from pre-IPO through business combination.

The Stages of the SPAC Process

1: Prospectus Filing

The first stage in the SPAC lifecycle is the prospectus filing. This filing includes disclosure of the terms and structure of the SPAC offering and the target industry or segment focus of the SPAC.

2: IPO Marketing

During the IPO marketing stage, the underwriter arranges the roadshow, for the sponsor group to present to potential IPO investors. This roadshow is less extensive than that of a traditional IPO.

3: IPO Pricing

Today’s SPACs are based on a number of standard characteristics. One of these characteristics is the IPO pricing. The IPO units are priced at $10.

Learn more about SPACs

Download our SPAC Sponsor Handbook ►

Download our SPAC M&A Handbook ►

4: Announcement

At this stage, the SPAC management signs a Definitive Merger Agreement for a Business Combination with an operating business and announces the transaction.

5: Proxy Filing

After a Definitive Merger Agreement is signed and the business combination is announced, the SPAC files a Proxy Filing with the SEC disclosing the terms of the merger and seeking stockholder approval.

6: Stockholder Marketing

After filing the Proxy Filing, the SPAC management and SPAC IPO underwriters market the proposed transaction to the SPAC stockholders and other investors.

7: Closing or Liquidation

If the closing conditions are met, the Business Combination is closed. If not, the SPAC liquidates and returns the funds to stockholders.

The Basics of Mezzanine Finance

Quick Facts

Usage

Mezzanine Finance is generally used in combination with an acquisition, restructuring, or other transactions, to bridge the gap between the total purchase price and the equity and senior debt that’s available.

Costs

High interest rates, mid teens up to the low twenties, including an equity component

Term

3-5 years, often with yield protection

Seeking Mezzanine Finance? Let’s discuss how we can help. ►

Overview

Mezzanine Finance is indebtedness that’s junior to the senior indebtedness but is senior to equity. Mezzanine Finance is usually employed in connection with transactions where senior lenders won’t provide the full amount of financing, and there’s a gap between the amount of equity and senior that can be provided and the ultimate purchase price.

Mezzanine Finance is characterized by high interest rates, from the mid teens up to the low twenties, including an equity component generally in the form of warrants or stock.

The term is typically three to five years in duration. Many mezzanine loans come with what’s known as yield protection which provides that during the first several years it’s not permitted to be repaid unless the full amount of interest that would otherwise be payable during that period of time is also paid with prepayment.

Mezzanine Finance is ordinarily used in the context of transactions such as mergers or acquisitions, restructurings, or other transactions to bridge the gap between the total purchase price and the equity and senior debt that’s available.

There are many mezzanine firms, which range from family offices to private equity related firms and specialty credit funds. They are all characterized by those higher interest rates and the same types of provisions and equity coverage.

Let’s discuss how we can assist you with your Mezzanine Finance. Get in touch with our team below.