CAIIB · ABFM · Chapter 25

Special Purpose Acquisition Company (SPAC)

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Business and Financial Management — CAIIB.

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One-liners from this chapter

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Q

Listing timeline — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: 12 – 18 months; SPAC / De-SPAC Route: 3 – 6 months (post target identification)

Q

Price discovery — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: Set by the market on listing day (book-build); SPAC / De-SPAC Route: Negotiated upfront between target and sponsor

Q

Marketing cost — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: Heavy roadshow + underwriter syndicate; SPAC / De-SPAC Route: Low — SPAC is already public

Q

Regulatory oversight — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: High — full prospectus, comfort letters; SPAC / De-SPAC Route: Historically lower (changed post-SEC 2024 Rules)

Q

Underwriter due diligence & "comfort letter" — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: Mandatory; SPAC / De-SPAC Route: Absent in de-SPAC (target was private)

Q

Investor base — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: Anchor + QIB + retail; SPAC / De-SPAC Route: Trust unit holders + PIPE investors

Q

Dilution to operating co. owners — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: Moderate; SPAC / De-SPAC Route: High — sponsor 20% promote + warrants

Q

Volatility tolerance — Traditional IPO / SPAC / De-SPAC Route?

A

Traditional IPO: Low — bad markets postpone IPO; SPAC / De-SPAC Route: High — price locked in privately

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