![]() Additional specific redemption requirements apply. Generally, public shareholders can redeem their shares for cash in connection with the proposed merger transaction or, upon SPAC liquidation, if the merger transaction does not take place. Public shares are redeemed by the company under certain conditions. SPACs may issue to public investors the same class of common stock that was issued to founders or a different class. Debt and equity capital are used to fund entity’s formation and the cost of the initial IPO.Īs part of the IPO, SPACs issue common stock to public investors. Sponsors may also provide the SPAC with debt financing. Founder shares are not subject to redemption by the company and are classified as part of SPAC’s permanent equity. ![]() SPAC is registered with the SEC and is a publicly traded company.Īs part of SPAC‘s formation, the newly formed company issues its founders or sponsors shares in exchange for nominal amount of equity capital. ![]() A SPAC or a special purpose acquisition company is a shell company listed on a stock exchange with the purpose of acquiring a private company and, therefore, making it public without going through the traditional IPO process. ![]()
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