What is SPAC
Special Purpose Acquisition Company（SPAC）;
● SPAC is a shell cheque company listed and traded on the Nasdaq main board. It holds no less than US$40 million in cash. Its main business is to find and acquire high-quality target companies to achieve the investment objectives of investors;
● SPAC is a simplified IPO listing approval process. It has better market prospects and lower cost than backdoor listings. It can quickly achieve listing on the Nasdaq main board in the United States in a short period of time. It is suitable for domestic enterprises in need. U.S. listing
● Many investors in the secondary market like to use SPAC indirectly to invest in high-growth companies that have not yet been listed. High-growth companies also prefer to use SPAC mergers to go public because of the flexibility of SPACs compared to traditional IPOs.
Advantages of overseas financing for Chinese-funded enterprises
Low threshold
Low requirements on corporate finance and management, and solve the problem of difficult financing
Short time
The financing process is simple, ensuring the completion of the financing plan in a short time
Wide financing channels
Provide various financing channels and various financing combinations to change the current situation of the company's shortage of funds
Less cost
No underwriting costs, low-cost financing, improve corporate competitiveness
Flexible financing scale
According to the required funds, the enterprise shall raise funds in the overseas capital market and have absolute control
No strict supervision and approval mechanism
The overseas capital market is mature, reducing financing uncertainty
SPAC flow chart
SPAC companies can conduct IPO financing without actual business,
After the company goes public, the funds raised by the IPO will be used to acquire or merge an entity company.
The company decides to go public by way of SPAC reverse merger, hires a merger counseling agency, signs a contract, sets up a working group, and creates a work distribution list
Create a working group
Due diligence
Submit the due diligence data, the counseling agency will analyze the business model and financial model, issue a professional investment bank report, ask interested SPAC promoters, and initially estimate the SPAC merger plan
Negotiate merger details and sign an agreement
Sort out finances, adjust the preparation of financial statements, hire an accounting firm within the scope of PCAOB to conduct audits; cooperate with the counseling agency to prepare for the merger with SPAC: strategic planning, performance disclosure, growth plans, shareholder circulars, etc.
The company builds an overseas structure
Rename of stock code
SPAC convenes a general meeting of shareholders to public shareholders to vote on mergers; creates custody; renames the stock code; renames the SPAC listed company; completes the listing transaction;
Hold a meeting with the intended SPAC party and sign the MOU to merge with the SPAC;
The SPAC shell side performs due diligence work, and the two parties negotiate the terms of the merger;
Signed a detailed contract of SPAC merger with investment bank
Enterprise and SPAC merger process
Timetable for the merger of the enterprise and SPAC
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