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ARTICLE · 12 JULY 2023

Top 10 Practice Tips: PIPE Transactions By SPACs

Mayer Brown
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This practice note discusses 10 practice points that can help you, as counsel to a special purpose acquisition company (SPAC) or its placement agent...

United StatesCorporate/Commercial Law
Anna T. Pinedo
Anna T. Pinedo
Brian D. Hirshberg
Brian D. Hirshberg
Ryan Castillo
Ryan Castillo
Marissa Dressor
Marissa Dressor
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This practice note discusses 10 practice points that can help you, as counsel to a special purpose acquisition company (SPAC) or its placement agent, execute a private investment in public equity (PIPE) transaction alongside a SPAC business combination transaction. A SPAC is a public shell company that uses proceeds from its initial public offering (IPO) to acquire a private company within a designated timeframe. Following an announcement of a proposed business combination, the SPAC must offer its public investors the option to either redeem their common stock for the original purchase price or to sell their common stock to the SPAC in a tender offer. This redemption option inherently creates uncertainty as to the amount of cash available to the combined company following the initial business combination. SPACs often seek to mitigate the redemption concern by issuing new securities to institutional accredited investors in a PIPE transaction that is contingent upon the

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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