SPAC Issuance Continues to Grow as More Institutional Investors
Embrace the Structure
NEW YORK–(BUSINESS WIRE)–ICR, a leading strategic communications and advisory firm, today
announced the release of ICR’s
Guide to a Successful SPAC. This primer update for SPACs
provides an overview of the SPAC market, explains how and where SPACs
typically list, which investment banks work on these IPOs, the emerging
interest of institutional investors, and the unique communications
challenges for executing a successful transaction or “de-SPACing.”
SPACs, formed to raise capital in an initial public offering with the
purpose of identifying and acquiring one or more operating companies,
are generally given up to two years to complete a successful business
combination.
“SPACs are attracting higher quality acquisition targets and more
private equity firms are willing to take back roll-over equity as part
of consideration in the deal. Yet structurally, SPACs still provide the
business seller with more liquidity than a typical IPO,” said Don Duffy,
President of ICR. “As the deal size grows, we are also seeing increased
institutional investor participation in these transactions.”
More than 70 public SPACs hold approximately $20 billion in cash and
have not yet completed acquisitions. In the first quarter of 2019 alone,
14 SPACs raised over $3 billion, almost exceeding the issuance from all
other types of IPOs combined.
“Investor perception of SPACs is clearly changing, as we see them coming
to appreciate that a SPAC IPO provides a nearly risk-free view of the
targeted acquisition transaction and the ability to vote on the deal,”
said Duffy. “In addition, the SPAC and target business offer investors
more transparency than a traditional IPO by providing forward-looking
guidance and substantial access to management as part of the process to
obtain shareholder approval and close a transaction.”
The de-SPAC process begins once the SPAC announces its proposed
acquisition, representing the start of a high-stakes, condensed timeline
to complete the transaction.
“The compressed timeframe to complete the transaction, or de-SPACing,
presents unique financial communication challenges that ICR has helped
numerous SPACs solve,” said Katie Turner, Partner at ICR. “Like a
typical IPO, this process highlights the critical importance of having
the necessary public company infrastructure in place, proper positioning
relative to a peer group, enhanced investor targeting, detailed
financial modeling, conservative forecasting, and the development of a
strategic communications plan to establish a successful track record as
a new public company.”
To be successful, SPACs need an experienced team that understands the
de-SPACing process, the industry, and the challenges related to
announcing an acquisition and the shareholder vote process. In addition,
an important, but often overlooked, aspect of the communications
strategy is to begin to transition the narrative from the SPAC sponsor’s
messaging to the go-forward business strategy.
“Complex transactions require deep experience and a comprehensive
communications strategy to be successful,” said Phil Denning, Partner at
ICR. “The SPAC acquisition announcement is a one-time opportunity to
position the transaction so that shareholders, and potential
shareholders, find the combination attractive. The merits of any deal
need to be clearly articulated to receive necessary approvals, and a
clear, coordinated communications program targeting all important
constituents – from employees to customers to investors – is critical
for overall success.”
ICR is the largest advisor and communications consultant to SPACs,
having completed dozens of transactions over the past decade. To obtain
a copy of ICR’s Guide to a Successful SPAC please click
here.
About ICR
Established in 1998, ICR partners with companies to execute strategic
communications and advisory programs that achieve business goals, build
awareness and credibility, and enhance long-term enterprise value. The
firm’s highly-differentiated service model, which pairs capital markets
veterans with senior communications professionals, brings deep sector
knowledge and relationships to more than 650 clients in approximately 20
industries. ICR’s healthcare practice operates under the Westwicke brand
(www.westwicke.com).
Today, ICR is one of the largest and most experienced independent
communications and advisory firms in North America, maintaining offices
in New York, Norwalk, Boston, Baltimore, San Francisco, San Diego and
Beijing. ICR also advises on capital markets transactions through ICR
Capital, LLC. Learn more at www.icrinc.com.
Follow us on Twitter at @ICRPR.
Contacts
ICR
Brian Ruby, 203-682-8268
[email protected]
