As the SEC digs in with new drafted rules on SPACs, the awareness flag is raised for sponsors and PIPE investors. The need for a governance playbook alongside a well-structured and considered SPAC process comes under scrutiny. Taking proper governance and diligence steps will be under the microscope by regulators and litigators. Lessons learned from past practices are abundant with new SPAC deals likely moving toward traditional core IPO best practices and extended timelines.
"As drafted, the rules aim to curb the practice of unrealistic revenue projections, increase disclosures related to sponsors' incentives and allow investors to more easily sue entities involved in blank-check deals."
SPACs are not dead nor is the intent to stymie sponsors / investors from taking advantage of the mechanism... more like... diligence, documentation, and more robust disclosure with a heavy sprinkling of fairness for the future public shareholders.
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