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Overview


A Specified Purpose Acquisition Company (“SPAC”) is a company created for the purpose of raising capital through an IPO and then completing a merger with an operating business selected by the SPAC’s management team.

As an investment vehicle, a SPAC offers investors numerous benefits, including an ability to participate in transactions typically restricted to private equity funds and an attractive risk profile (e.g., downside protection in the form of voting rights to approve the transaction and return of capital with interest if no deal is consummated).


  • A company created to raise capital through an IPO, and then completing a merger with an operating business selected by the SPAC’s management team
  • An investment vehicle offering investors numerous benefits, including:
    • Ability to participate in transactions typically restricted to private equity funds
    • An attractive risk profile (e.g. voting rights, downside protection)
    • A market-tested tool for private, growth companies to obtain access to capital and the public markets

A SPAC is much like a publicly traded private equity fund, except that the rules allow only one initial transaction that must close typically within 24 months from the IPO or the SPAC normally self-liquidates and returns funds, including interest, to the public investors.

The enterprise value of the operating company must be valued at over 80% of the SPAC’s net assets, but larger transactions can be completed through issuing additional stock, completing an equity private placement or raising debt capital.


  • Typically two years from SPAC IPO to complete merger transaction
  • SPAC offers investors warrants for each share owned
  • SPAC shares, units and warrants trade publicly post IPO
  • SPAC shares, units and warrants generally do not trade/move significantly until deal is announced
  • Merger must be valued over 80% of the SPAC’s net assets
  • SPAC and target agree on terms / valuation and sign definitive merger agreement
  • Transaction needs to be approved by 70 to 80% of SPAC investors
  • Upon approval, SPAC renamed to target name and trades like any other public company

Once a merger transaction is completed, the merged company becomes like any other publicly traded company and can do additional acquisitions and begin to compensate management and the board of directors.

 

 


KBL Healthcare Acquisition Corp. III
380 Lexington Avenue, 31st Fl.
New York, NY 10168
Ph: (212) 319-5555
Fax: (212) 319-5591
Inquiries: inquiries@kblhealthcare.com

 

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