IPO vs. SPAC: What’s the right choice for your business?

6/25/2021

If you’re thinking about going public, one of your first decisions might be whether to go through a traditional IPO or a special purpose acquisition company. See the high-level pros and cons of each path, and get help managing the complexities.

As you navigate the process of going public, one of your major decisions might be whether to go the traditional IPO route or use a special purpose acquisition company (SPAC). While SPACs were often used as a last resort by financial institutions in the 1980s and 1990s, they now typically have high-quality sponsors and investors who are industry focused.

With favorable market conditions at play, SPACs exploded in popularity in 2020. As of June, SPACs have raised more than $100 billion in 2021 – already over $20 billion more than in 2020.1

While both traditional IPOs and SPAC transactions require extensive due diligence, tax structure decisions, Securities and Exchange Commission disclosures, and governance, policy, and procedure assessments, some notable differences exist. Choosing which option is right for your business depends on a variety of factors.

IPO vs. SPAC: What’s the right choice for your business?

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The process of going public can be complex, but now might be the time to take advantage of a favorable market. If you’re looking for more information about whether going public is right for your business, check out, “A Guide to Going Public and Living as a Public Company,” a comprehensive look at all the factors involved in going public.

 

1 SPAC Research, accessed June 18, 2021, https://www.spacresearch.com

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Our dedicated specialists include senior-level support with internal controls expertise, practice depth, and regular involvement with regulators. Ask us about our customized IPO readiness assessment, which can evaluate your business’s current readiness and help create a specific project plan to get you ready for going public.
David L. Kral
David L. Kral
Office Managing Partner, San Francisco/San Jose
Mandi Simpson
Mandi Simpson
Partner, Accounting Advisory
William C. Watts
William C. Watts
Managing Principal, Consumer Markets