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The IPO is dying
Here’s a thread on why SPACs (special purpose acquisition companies) are disrupting the IPO
https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇🏽" title="Rückhand Zeigefinger nach unten (mittlerer Hautton)" aria-label="Emoji: Rückhand Zeigefinger nach unten (mittlerer Hautton)">
Here’s a thread on why SPACs (special purpose acquisition companies) are disrupting the IPO
2/
Traditional IPOs are designed to pop on the first day
It gets us tweeting. It makes the banks clients richer
Traditional IPOs are designed to pop on the first day
It gets us tweeting. It makes the banks clients richer
3/
Yet this is daylight robbery
The company gets screwed out of $$$ https://twitter.com/bgurley/status/1271173082544091136?s=20">https://twitter.com/bgurley/s...
Yet this is daylight robbery
The company gets screwed out of $$$ https://twitter.com/bgurley/status/1271173082544091136?s=20">https://twitter.com/bgurley/s...
4/
So why are SPACs becoming a thing?
SPAC IPOs are beginning to rival traditional ones
So why are SPACs becoming a thing?
SPAC IPOs are beginning to rival traditional ones
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It comes down to incentives
All 3 stakeholders (companies, lead investors, banks) have equal or better experiences with a SPAC than a traditional IPO
It comes down to incentives
All 3 stakeholders (companies, lead investors, banks) have equal or better experiences with a SPAC than a traditional IPO
6/
Companies get much clearer expectations with SPACS
- Security during turbulent times (like today)
- Clear pricing
- Straightforward processu2028 https://twitter.com/bgurley/status/1282714023440429056?s=20">https://twitter.com/bgurley/s...
Companies get much clearer expectations with SPACS
- Security during turbulent times (like today)
- Clear pricing
- Straightforward processu2028 https://twitter.com/bgurley/status/1282714023440429056?s=20">https://twitter.com/bgurley/s...
7/
Lead investors get high upside and low downside
- Provide only ~2% of the funds
- Don’t lose much if deal falls through
- Get 20% of the SPAC for almost free if it does!
Lead investors get high upside and low downside
- Provide only ~2% of the funds
- Don’t lose much if deal falls through
- Get 20% of the SPAC for almost free if it does!
8/
Banks still make bank
Fees from underwriting:
- Traditional IPO = 3-7%
- SPAC IPO = ~5.5%
Banks still make bank
Fees from underwriting:
- Traditional IPO = 3-7%
- SPAC IPO = ~5.5%
9/
If you want to learn more, check out what I wrote todayhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👇🏽" title="Rückhand Zeigefinger nach unten (mittlerer Hautton)" aria-label="Emoji: Rückhand Zeigefinger nach unten (mittlerer Hautton)"> https://witty.substack.com/p/back-to-spac- ">https://witty.substack.com/p/back-to...
If you want to learn more, check out what I wrote today
