A SPAC (Special Purpose Acquisition Company) is a publicly traded investment vehicle that offers an alternative path for private companies to go public. This investment vehicle raises capital through a public offering with the sole intent of merging with or acquiring an existing private firm. The key advantage of a SPAC is its efficiency — companies can become publicly listed without undergoing the lengthy process of a traditional IPO.
Since 2015, ARC has been a trusted advisor in 50+ SPAC transactions, assisting companies and sponsors in navigating this increasingly popular route to the public markets.
History of SPACs
SPACs have evolved from a niche financial product in the 1990s to a mainstream option in the 2010s, gaining significant traction among both investors and private companies. This growth was driven by an increasing appetite for alternative investment opportunities, with targets leveraging SPACs as a faster, more cost-effective way to go public, reducing the complexities and time of a traditional IPO. In 2020, SPACs surged in popularity, with more than 240 IPOs raising a record $83B.
While the market saw a dip in 2022 and 2023, primarily due to market dynamics and rising interest rates, SPACs remain a powerful avenue for companies seeking to go public. They offer a streamlined, efficient route to the public markets—enabling businesses to access capital faster and with greater flexibility than the traditional IPO process.
Today, with nearly 600 active SPACs seeking merger targets and billions in capital ready to be deployed, SPACs continue to present a wealth of opportunity for target companies and investors. Despite a slowdown in recent years, the SPAC market has shown signs of resurgence, with over $9B raised through SPAC IPOs in 2024 alone, signalling a renewed confidence in the structure.
The De-SPAC Process — ARC Group as Your Trusted Advisor
1. Preparation
ARC Group partners closely with your team to determine if a SPAC merger is the right strategic move for your business. Working alongside your management and board, we analyze market conditions, funding requirements, and growth opportunities to ensure this path aligns with your long-term objectives. If we determine that a SPAC merger is the optimal choice, ARC will advise on selecting the most suitable SPAC sponsor. Leveraging our extensive network and transaction expertise, we identify the ideal sponsors tailored to your company’s specific needs.
2. Due Diligence & Negotiation
During the due diligence phase, ARC manages the process, ensuring it runs smoothly and efficiently for your company. We handle key aspects such as financials, legal structure, and operations, while working closely with the SPAC sponsor. Your team stays focused on day-to-day activities, and we take care of all necessary disclosures and managing deadlines. Once due diligence is completed, ARC facilitates the negotiation of merger terms, including valuation, equity distribution, and shareholder rights. Our goal is to ensure a seamless transaction that maximizes value for all stakeholders.
3. Filing
After the merger agreement, ARC helps prepare the proxy statement for SEC submission, outlining the business combination details, financials, and company details. The SEC reviews, and once approved, the SPAC’s shareholders will vote on the merger.
4. Vote & Closing
During this phase, SPAC shareholders vote to approve the merger. If the vote passes, the transaction closes and your company becomes publicly traded. ARC manages all filings and regulatory requirements to ensure a smooth closing. Your company’s shares will then begin trading on a major exchange, offering investors increased liquidity and access to a vast network of investors.
De-SPAC Advantages Compared to a Traditional IPO:
- Quicker process
- More certainty of valuation and pricing
- Reduced regulatory hurdles
- More cost effective
- Terms tend to be more favorable
Considering a SPAC/De-SPAC? Let ARC Group support with the process – email us at contact@arc-group.com.
Author:
Callum Cox
Analyst
Read more about our capital markets expertise
References
- Harvard Business School
- New York Times
- SpacInsider
