Special Purpose Acquisition Companies (SPACs) are newly-formed companies that raise capital in an initial public offering (IPO) for the sole purpose of using that capital to acquire assets or, more typically, one or more companies identified after the IPO. SPAC IPOs have increased dramatically during the past four years (33 in 2017, 46 in 2018, 59 in 2019, and 248 in 2020), as operating companies, PE and VC firms, institutional investors and other constituents have recognized the advantages of combining with a SPAC to access the public markets and/or obtain liquidity. In 2019 and 2020, SPAC IPOs outpaced every other industry segment. SPACs can provide a variety of advantages over a traditional IPO or other liquidity alternatives, including:
- Quicker access to public markets;
- More attractive pricing; and
- More flexible structures.
Business combinations with SPACs, or “deSPAC transactions”, are also complex transactions, with a limited timeframe for completion, thus requiring deep market knowledge and thorough preparation for success.
Goodwin’s experience with SPACs is extensive. Over the last 20 years, our team has completed scores of SPAC transactions, including more than 40 in just the last three years. We advise clients in all aspects of the SPAC lifecycle, including formation and structuring sponsor entities; representing SPACs and SPAC sponsors in IPOs; representing operating companies, their investors and SPACs in deSPAC transactions; structuring the debt and equity financing transactions that are often needed to facilitate the closing of deSPAC transactions; and advising investors in both SPAC IPOs and deSPAC transactions. Goodwin has coined the term "SIPO" to represent the deSPAC transaction process.
Goodwin’s SPAC litigation team is instrumental in discussions around key process and disclosure considerations in connection with SPAC IPOs and SIPO transactions. These litigators work hand-in-hand with the deal team on key steps to limit litigation risk throughout both the SPAC IPO and SIPO transaction process, and have been embedded within our deal teams for years. As regulatory scrutiny increases, it’s more important than ever for companies to select the correct legal partner for these transactions.
Our lawyers have a deep understanding of the legal, business, financial and marketing issues that affect the success of SPACs. Our lifecycle SPAC lawyers take a holistic approach to each transaction by not focusing on a specific phase of the deal, but rather using a forward looking mindset to ensure we are setting these soon-to-be public companies up for success in the global markets. We offer a global team, with lawyers in the U.S., Europe and Asia working collaboratively to assist clients with fast-track cross-border transactions.
In addition to our strong technical knowledge of SPAC IPOs and SIPOs, we have deep industry experience in the key industries that SPACs are focused on, including private equity, life sciences, technology, financial services and real estate. We have also completed SPAC transactions for clients in emerging industries such as fintech, proptech and cannabis. Our industry expertise is unique among law firms, and provides sponsors and operating companies looking to access the public markets and/or obtain liquidity via a SPAC extra advantages.
A selection of Goodwin’s recent experience with SPAC transactions includes representing:
- Therapeutics Acquisition Corp. D/B/A Research Alliance Corp. in its $138 million SPAC IPO, the first warrantless SPAC in history
- Ribbit LEAP in its $350 million SPAC IPO, a SPAC using performance-based founder shares instead of traditional founder shares
- Open Lending LLC in its business combination with Nebula Acquisition Corporation, one of the top-performing deSPAC transactions in history
- Social Finance, Inc. (SoFI) in its business combination with Social Capital Hedosophia Holdings Corp. V
- Vy Global Growth in its $500 million SPAC IPO
Goodwin is also providing ongoing representation to SPAC sponsors in IPOs and operating companies in deSPAC transactions that are not yet publicly disclosed.