Hello everyone,
I'm curious to know why SPAC's have become extremely popular in recent months. To my understanding, a sponsor creates a SPV to acquire/merge with a company in a few months. Given the current market volatility, valuations for a lot of businesses must be lower, so I'm curious to know why sponsors are raising money now to buy in the future instead of executing now?
Would appreciate any help, thanks!
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1) markets are hot 2) lot of PE funds are reevaluating their portfolio companies and looking to pursue a liquidity event 3) IPOs take a lot of time 4) the purchase multiples for the companies are really high (think 15.0x+) and they need to find an exit 5) SPACs provide an IPO exit in a short amount of time
Conclusion: think of it as a way for PE funds to pursue an exit and realize a “win” for their LPs
Above should be only answer you look to
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