If you weren't convinced SPACs were a fraud before...

HoustonHusky · February 2021

Maybe the fact Alex Rodriguez ($500MM) and now Colin Kaepernick ($258MM) have joined the fray will change your mind:

https://www.zerohedge.com/markets/kaepernick-reveals-socially-driven-spac

PurpleThrobber · February 2021

The Tug version of this news is also available.

ARod doesn't bother me much - he's moved his game into the bidness world.

Kaep is a grifter.

GreenRiverGatorz · February 2021

I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.

creepycoug · February 2021

GreenRiverGatorz said:
I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.

I'll post more on this on Friday ... it's board week here in the Creep house ... but ultimately, they have to comply with those rules. I haven't ever represented an SPAC, so bear than in mind. But they have to file an S-1 to gather the public investment and are required to hold funds in trust until used for the stated purpose. If you buy at IPO and they never pull off the merger, you're supposed to get your money back. And before the SPAC's shareholders can vote on the target merger or acquisition, they have to be provided with all the usual merger proxy goodies ... audited financials of the target, etc. etc.

I've never invested in one. Here's my money, I hope you go find a target and pull it off and then you'll give it back if you don't ... didn't sound like a great plan to me. But the structure has worked. I have no stats on how often they unwind having never completed their stated mission. That would be a chintresting thing to know.

GreenRiverGatorz · February 2021

creepycoug said:

GreenRiverGatorz said:
I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.
I'll post more on this on Friday ... it's board week here in the Creep house ... but ultimately, they have to comply with those rules. I haven't ever represented an SPAC, so bear than in mind. But they have to file an S-1 to gather the public investment and are required to hold funds in trust until used for the stated purpose. If you buy at IPO and they never pull off the merger, you're supposed to get your money back. And before the SPAC's shareholders can vote on the target merger or acquisition, they have to be provided with all the usual merger proxy goodies ... audited financials of the target, etc. etc.

I've never invested in one. Here's my money, I hope you go find a target and pull it off and then you'll give it back if you don't ... didn't sound like a great plan to me. But the structure has worked. I have no stats on how often they unwind having never completed their stated mission. That would be a chintresting thing to know.

So it sounds to me like the only difference is that your traditional IPO process involves the filing of an S-1 to become SEC compliant, whereas the SPAC approach only "effectively" requires an S-4 (the S-1 is still filed for the shell of the company, but as you mentioned the S-4 would be filed upon the actual merger, i.e. the "meat" of the eventual public company).

What I simply don't know is if there are any meaningful differences in compliance between the S-1 and S-4. E.g. if Company A goes through the typical IPO/S-1 process, whereas Company B goes public through the SPAC/S-4 route, is there anything to suggest that the former would have a stronger compliance framework than the latter, based solely on which SEC filings they were subject to?

PurpleThrobber · February 2021

GreenRiverGatorz said:

creepycoug said:

GreenRiverGatorz said:
I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.
I'll post more on this on Friday ... it's board week here in the Creep house ... but ultimately, they have to comply with those rules. I haven't ever represented an SPAC, so bear than in mind. But they have to file an S-1 to gather the public investment and are required to hold funds in trust until used for the stated purpose. If you buy at IPO and they never pull off the merger, you're supposed to get your money back. And before the SPAC's shareholders can vote on the target merger or acquisition, they have to be provided with all the usual merger proxy goodies ... audited financials of the target, etc. etc.

I've never invested in one. Here's my money, I hope you go find a target and pull it off and then you'll give it back if you don't ... didn't sound like a great plan to me. But the structure has worked. I have no stats on how often they unwind having never completed their stated mission. That would be a chintresting thing to know.
So it sounds to me like the only difference is that your traditional IPO process involves the filing of an S-1 to become SEC compliant, whereas the SPAC approach only "effectively" requires an S-4 (the S-1 is still filed for the shell of the company, but as you mentioned the S-4 would be filed upon the actual merger, i.e. the "meat" of the eventual public company).

What I simply don't know is if there are any meaningful differences in compliance between the S-1 and S-4. E.g. if Company A goes through the typical IPO/S-1 process, whereas Company B goes public through the SPAC/S-4 route, is there anything to suggest that the former would have a stronger compliance framework than the latter, based solely on which SEC filings they were subject to?

SPACs have to give back the money if they don't find a qualifying deal within 2 years.

It's also a cheap way to go public via an RTO. Theoretically, the SPAC could set up some form of interim financing arrangements with the target company (convertible notes, etc.) on the front side then keep the target company off the radar for 1 year and 11 months (theoretically) while the target gets their shit together. Then hit the ground running with some sweet cash flow/earnings.

There's also a 'junior' version of a SPAC called a Form 10 company that essentially does the same thing.

The other appreciable difference between a traditional IPO is that greedy money fund A doesn't have to share his allocation of shares with greedy money fund B.

Plus, there's actually a couple different points of "lift" where the investors can make some jack/bail. If they are in early, they get cheap shares. There's also a lift when a target is identified (can't remember what that's called - let's just call it a Letter of Intent/Due Dilligence signed). Then there's another when the RTO is complete and the deal closes.

GrundleStiltzkin · February 2021

creepycoug said:

GreenRiverGatorz said:
I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.
I'll post more on this on Friday ... it's board week here in the Creep house ... but ultimately, they have to comply with those rules. I haven't ever represented an SPAC, so bear than in mind. But they have to file an S-1 to gather the public investment and are required to hold funds in trust until used for the stated purpose. If you buy at IPO and they never pull off the merger, you're supposed to get your money back. And before the SPAC's shareholders can vote on the target merger or acquisition, they have to be provided with all the usual merger proxy goodies ... audited financials of the target, etc. etc.

I've never invested in one. Here's my money, I hope you go find a target and pull it off and then you'll give it back if you don't ... didn't sound like a great plan to me. But the structure has worked. I have no stats on how often they unwind having never completed their stated mission. That would be a chintresting thing to know.

I might be able to get you some numbers on that.

GrundleStiltzkin · February 2021

GrundleStiltzkin said:

creepycoug said:

GreenRiverGatorz said:
I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.
I'll post more on this on Friday ... it's board week here in the Creep house ... but ultimately, they have to comply with those rules. I haven't ever represented an SPAC, so bear than in mind. But they have to file an S-1 to gather the public investment and are required to hold funds in trust until used for the stated purpose. If you buy at IPO and they never pull off the merger, you're supposed to get your money back. And before the SPAC's shareholders can vote on the target merger or acquisition, they have to be provided with all the usual merger proxy goodies ... audited financials of the target, etc. etc.

I've never invested in one. Here's my money, I hope you go find a target and pull it off and then you'll give it back if you don't ... didn't sound like a great plan to me. But the structure has worked. I have no stats on how often they unwind having never completed their stated mission. That would be a chintresting thing to know.
I might be able to get you some numbers on that.

Very quick look: About 57% unwind before an acquisition. But this is based of those effective 2/1/2019 and earlier.

GrundleStiltzkin · February 2021

GrundleStiltzkin said:

GrundleStiltzkin said:

creepycoug said:

GreenRiverGatorz said:
I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.
I'll post more on this on Friday ... it's board week here in the Creep house ... but ultimately, they have to comply with those rules. I haven't ever represented an SPAC, so bear than in mind. But they have to file an S-1 to gather the public investment and are required to hold funds in trust until used for the stated purpose. If you buy at IPO and they never pull off the merger, you're supposed to get your money back. And before the SPAC's shareholders can vote on the target merger or acquisition, they have to be provided with all the usual merger proxy goodies ... audited financials of the target, etc. etc.

I've never invested in one. Here's my money, I hope you go find a target and pull it off and then you'll give it back if you don't ... didn't sound like a great plan to me. But the structure has worked. I have no stats on how often they unwind having never completed their stated mission. That would be a chintresting thing to know.
I might be able to get you some numbers on that.
Very quick look: About 57% unwind before an acquisition. But this is based of those effective 2/1/2019 and earlier.

Or another quick look: Of SPACs effective since 2/1/2019, 6% have completed an acquisition.

PurpleThrobber · February 2021

GrundleStiltzkin said:

GrundleStiltzkin said:

GrundleStiltzkin said:

creepycoug said:

GreenRiverGatorz said:
I'm not sure A-Rod or Kaep inject anything new to the equation, but I'm open to hearing reasons why they matter other than the obvious low-hanging political fruit.

But I'm curious as to why SPACs have ever been allowed period. Perhaps I'm missing some nuance, but is this anything more than a transparently obvious move to get around SEC reporting requirements? The spirit of these requirements is to underlie and strengthen investor confidence in the capital markets. So then why in that same breath does the SEC green light a tool that effectively allows privately held companies (which are almost never compliant with the rigors of SEC reporting), to immediately go public without all of the prescribed compliance-framework building that an IPO traditionally requires?

I'm hoping that our benevolent creep, being the securities lawyer that he is, can provide a devil's advocate rationale for SPACs existing.
I'll post more on this on Friday ... it's board week here in the Creep house ... but ultimately, they have to comply with those rules. I haven't ever represented an SPAC, so bear than in mind. But they have to file an S-1 to gather the public investment and are required to hold funds in trust until used for the stated purpose. If you buy at IPO and they never pull off the merger, you're supposed to get your money back. And before the SPAC's shareholders can vote on the target merger or acquisition, they have to be provided with all the usual merger proxy goodies ... audited financials of the target, etc. etc.

I've never invested in one. Here's my money, I hope you go find a target and pull it off and then you'll give it back if you don't ... didn't sound like a great plan to me. But the structure has worked. I have no stats on how often they unwind having never completed their stated mission. That would be a chintresting thing to know.
I might be able to get you some numbers on that.
Very quick look: About 57% unwind before an acquisition. But this is based of those effective 2/1/2019 and earlier.
Or another quick look: Of SPACs effective since 2/1/2019, 6% have completed an acquisition.

About the same as the chance for a business to get VC money.

Just a different flavor for the banksters to get their mitts in to the action.

GrundleStiltzkin · February 2021

@Gladstone been holding out on us.
https://www.sec.gov/Archives/edgar/data/1843248/000119312521034640/d63539ds1.htm

creepycoug · February 2021

GrundleStiltzkin said:
@Gladstone been holding out on us.
https://www.sec.gov/Archives/edgar/data/1843248/000119312521034640/d63539ds1.htm

that's where he's been.

I know he's dying to post on this board, but he can't bring himself to do it because of the @creepycoug brand. he hates me.

@Gladstone , swallow your pride and come on over for some hawt finance talk. or cars and watches. whatever you want, my sophisticated band of degenerates can deliver.

rodmansrage · February 2021

HoustonHusky said:
Maybe the fact Alex Rodriguez ($500MM) and now Colin Kaepernick ($258MM) have joined the fray will change your mind:

https://www.zerohedge.com/markets/kaepernick-reveals-socially-driven-spac

between this and his collab with ben and jerry's, it really shows how much he wants to get back into the nfl.

(yes, tug level poast but i digress)