An IPO by means of a SPAC is similar to a typical reverse osmosis . But unlike conventional inverse mergers, SPACs arrive with a fresh public shell company, better economics to its management teams and patrons, certainty of financing/growth funds in position – except in the instance where shareholders don’t approve a purchase, a built in institutional investor base and a seasoned management team. SPACs are basically set up using a clean slate by which the management team hunts for a goal to get. That is contrary to preexisting businesses going public in regular reverse mergers.
SPACs generally raise more income than standard inverse mergers in the time of the IPO. SPACs also increase money quicker than equity capital. The liquidity of SPACs also brings more investors since they’re extended in the open sector.
Hedge funds and investment banks are extremely interested in SPACs since the risk factors appear to be lower compared to conventional reverse mergers. SPACs permit the targeted firm’s management to keep on conducting the company, sit the board of supervisors and gain from future expansion or upside since the company continues to expand and develop together with the public business architecture and access to growth capital. The management staff members of this SPAC generally take seats on the board of supervisors and continue to add value to the company as advisers or liaisons into the organization’s investors.