Equities are ailing. And yes, the IPO market is basically dead.
But there is a bright spot: Special Purpose Acquisition Corporations (known as SPACs). Essentially, this is a new-fangled public offering.
So, what's going on here?
Well, I had a chance to interview Andre Peschong, who is a veteran investment banker and has his own blog, Deal Flow Diaries.
What is a SPAC? The structure?
A SPAC is really an updated and cleaned up version of the old blind pool or blank check company. Basically, these SPACs are formed around qualified management teams that typically have a depth of knowledge in certain areas of business or industry. The SPAC structures are all fairly uniform but of late have been changing due to a number of items, such as market conditions, investor demands and SEC regulations.
The management team usually buys into the SPAC for some nominal amount -- relative to the total raise -- and receives for that a "promote," which is their equity benefit. That promote is not more than 20% and can actually be scaled back relative to getting a transaction closed.
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
