Although S.E.C allows to close an acquisition within 36 months, the market customs will require an transaction at latest within 18 to 24 months.
In general, the markets – and thus also the shareholders of SPAC – will appreciate an acquisition of enterprise values that generates more than 200% of the IPO proceeds; the target of a SPAC management should be 3x or more. While the S.E.C. regulations only require that 80% of the IPO proceeds are yielded in enterprise value, it is unlikely that this return would be welcomed by the institutional investors and most probably they will redeem their shares.
As the planned acquisition is described in the securities prospectus (Form S-1) only very general and generically, as a contingency the managment of the corporation could also suggest a different target to prevent a failure of the SPAC and avoid its liquidation.
During the Acquisition Phase the managment team has do identify a target company, conduct dillegence on it and negotiate the acquisition agreement. Celtic Asset & Equity Partners works with the managment team on this. Further, we will maintain investor relations and liaise between the SPAC, securities counsel and investment bank(s).
Identify target business
Negotiate acquisition agreement
Potentially arrange committed PIPE and/or debt financing
Begin preparing proxy/tender offer document
Sign acquisition agreement and financing commitments
In this phase the SPAC announces the proposed business combination and presents it to the shareholders to get an approval for the transaction. It is our task within this stage to provide the public and shareholders with background information about the transaction and the industry.
A SPAC also may conduct redemptions pursuant to the SEC’s tender offer rules, in which case the SPAC would file tender offer documents with the SEC instead of a proxy statement.
The funds from the trust account are primarily used to complete the business combination and to pay for the redemption of shares from any shareholders that have elected to redeem their shares.
Any public shareholders can redeem their shares of common stock for a pro rata portion of the trust account at the time of the closing of the business combination, whether they vote for or against the business combination. Often, the agreement relating to the business combination contains a condition requiring a specified amount of cash to remain after the SPAC satisfies all redemption requests.