You have been hearing a lot about special-purpose acquisition companies (SPACs). And you have probably started to consider whether a merger with a SPAC might be the best next move for your private company. But there is also a lot of hype; understanding all of the benefits—and the unexpected risks and complexities—will be critical.
In this edition of Privately Speaking, we take a private company view of the SPAC markets to help identify some of the key opportunities and challenges of this rapidly evolving route to public markets.
Speed is often touted as a key benefit for merging with a SPAC. But the reality is that SPACs are not simple transactions. They are closely regulated by the SEC, which means sellers must still complete the normal SEC filing requirements, audit requirements, and due diligence processes. And they must do it all in a compressed timeline. Many private companies simply don’t have the appropriate processes or structures in place to do it all properly in an aggressive timeframe.
Conor Moore, National Leader, KPMG Private Enterprise
Consider this:
From Day One, you will need the systems to support timely SEC filings, internal management reporting (which is the basis of the MD&A and earnings calls), operational metrics (e.g., key performance indicators), and data analytics.
You want to make sure that you have the right environment in place to meet your reporting requirements starting on Day One. But you also need to remember that IT projects take time (sometimes more time than expected). The sooner you start to create a future-ready design, the less you will need to worry about later when you’re dealing with the new pressures of running a public company.
Sal Melilli, National Audit Leader, KPMG Private Enterprise
Privately Speaking Series
Privately Speaking tackles the issues that privately-held entities, including private equity- and venture capital-backed companies, care about most. In each edition, we share insights, as well as practical, actionable tips to help boards and executive management grow, strengthen, and transition their privately-held businesses.
Whether your company is starting out and growing or strengthening and transitioning, this series promises to explore ways to help companies be successful at any stage of the business lifecycle.
