FEATURE
In recent years , we have seen the financial markets becoming increasingly volatile and this has led to many companies looking for a different route to take their companies public . Many businesses now need the liquidity of an initial public offering ( IPO ) to fund business growth , yet the risk of doing so has never been greater .
IPOs are traditionally a major milestone for fast growing companies , and they are a great way to raise capital but there are many disadvantages , including being difficult , time consuming and expensive , with founders needing to put together a full package for investors , engage underwriters and pay out huge fees . There is also the risk , if the opening price is wrong , founders can end up losing billions .
Roger James Hamilton , CEO and Founder of Genius Group , a global entrepreneur education company , explores the new trend of special purpose acquisition companies ( SPACs ) taking companies public and how this is a great strategy for those businesses looking for rapid growth .
So , what is the answer for businesses that don ’ t want to go down the traditional IPO route ? In recent years we have seen a boom in companies using SPACs , which are ‘ blank cheque ’ companies , created solely to raise capital via an IPO in order to then merge with private companies . Merging with a SPAC allows companies to access liquidity via a public market .
As compared to traditional IPOs , SPACs can be significantly quicker . Due to its lack of fundamental operation , both financial statements and prospectus filed for a SPAC are significantly shorter and can be prepared in a matter of weeks ( compared to months for a traditional IPO ).
HOW SPACS ARE THE NEW WAY OF TAKING COMPANIES PUBLIC WITHOUT HAVING TO GO THROUGH AN IPO
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