This summer, while I was writing about the separation of ownership from ownership, I also had a team of 3 RAs collecting data on Special Purpose Acquisition Companies, or SPACs. Gordon blogged about these back in 2007, and I will have a lot to say about them in the coming months. For now, the short version is this (culled from our current draft):
SPACs are born when a group of founders, known as sponsors, incorporate a “blank check” company, a shell company with no assets or operating histories. They then take the company public with the promise that they will shortly complete an acquisition of a private target, and use various bonding mechanisms to assure investors that their money will not be misapplied. Going public is a relatively cheap proposition because, unlike with the typical initial public offering, there is very little for the SPAC to disclose. An investor is basically buying a management team.
They're really fun, and I think there's a lot going on. We (I'm co-authoring with my finance friend Mike Stegemoller again) have lots of data to crunch, enough to keep me busy for a year, I think. So last week I was coming to the end of a case study of one particular company and trying to understand exactly what was going on, and on a whim I picked up the phone and called up one of the bankers who'd organized the SPAC in question. It was a Friday afternoon, and I was a pointy-headed academic calling up a NY banker out of the blue. Of course I got his voicemail, and I left a message on the off chance he might take pity on me.
Yesterday he called me back! And so I'm entering the "talk to people who actually did this stuff" phase of my empirical research. If any of you Glom readers have worked or are working on a SPAC, I'd love to hear from you. rodrig at uga.edu
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