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Perspectives

IPO process guidebook

The key to successful IPO strategies

An initial public offering (IPO) is an important event in the life of an organization as they seek to grow or provide liquidity to early investors and employees. But the path to an IPO is both complex and challenging. In the fifth edition of this report, we explore recent trends, regulations, market shifts that impact the IPO process, and outline strategies to help your organization prepare for going public.

IPO strategies for the changing business landscape

On the surface, the transformation from a private to a public company seems fairly straightforward. A company typically goes public when it sells securities to the general public for the first time. But exploring the opportunity to go public presents many challenges due to market volatility, increased regulations, expanded investor scrutiny of corporate governance, and heightened legislative influence.

In light of these challenges, it’s extremely important that any organization considering an IPO be well prepared. This fifth edition of Strategies for Going Public, created by Deloitte in collaboration with Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates aims to help organizations effectively prepare for an IPO. It provides an overview of the IPO process, and detailed information regarding:

  • The advantages and disadvantages of going public
  • The new regulatory requirements for public entities
  • The procedures that organizations will need to plan for
  • Determining the right time to go public
  • The various stakeholders involved, and who can help you prepare
  • What happens after you go public

If you’d like to talk with one of our IPO specialists or request a hard copy of the publication, please reach out to Jeff Bergner, Mike Dziczkowski, Rod Gauer, Christine Murphy, Sandy Pfeffer, Heath Poindexter, or Previn Waas

Strategies for Going Public - Fifth Edition

Seller considerations for transactions between carve-outs and SPACs

As a result of the recent sharp increase in mergers between Special Purpose Acquisition Companies (SPACs) and private companies, there are beginning to be fewer remaining private companies attractive to SPACs. While traditional SPAC transactions will remain, SPACs will need to evaluate other transaction constructs to utilize their raised capital in the specified time period. One potential transaction construct for a SPAC is acquiring a portion of a larger organization that can stand alone as an independent business, commonly known as a carve-out transaction. Carve-out transactions traditionally occur when a parent entity wishes to pursue a sale, spin-off, or initial public offering of a portion of the parent entity. SPACs have now created a new, non-traditional path for companies looking to divest a component of their business.

Seller considerations for transactions between carve-outs and SPACs

Compliance & Anti-Fraud Considerations in SPAC transactions

A Special Purpose Acquisition Company (SPAC) is a corporation, used for the sole purpose of raising investment capital through an Initial Public Offering (“IPO”), that uses a combination of its own IPO proceeds and additional financing from investors to fund the acquisition of a private operating company, the “target”. Once the SPAC successfully completes the acquisition of the target, the latter it is then able to use the SPAC’s public filing status and, as a result, the target effectively becomes part of a public company.

Although SPAC transactions have been around for quite some time, there has been growing number of corporations utilizing this type of transaction vehicle. There were 248 SPACs launched in 2020, up from 59 in 2019, according to SPACInsider. The increase in the use of SPAC IPOs as alternatives to traditional IPOs may be the result of a confluence of several factors including:

  • SPAC transactions may provide easier access to capital, even during times of market uncertainty
  • SPAC transactions may provide more certainty because of up-front pricing and valuation that is in large part determined through negotiations that typically occur months before the transaction closes
  • SPAC transactions may potentially result in lower transaction fees
  • The timeline for a company to become a public entity is expedited

Read more to find out what compliance and anti-fraud considerations target companies entering SPAC transaction should prepare for.

A Special Purpose Acquisition Company (SPAC)
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