The New York Times’ Andrew Ross Sorkin writes today that the big names behind blank-check companies don’t always stick around. So he asks, could changing that protect investors?
Tying sponsors’ stock commitments to post-merger revenue projections would lock them in for longer. If a target company makes forecasts for five years ahead, restricting its SPAC’s sponsor from selling for five years would better align backers with what they are selling to the public, Sorkin suggests.
Unsurprisingly, not everyone likes the idea. Billionaire investor Chamath Palihapitiya, who drew criticism for unexpectedly selling some of his stake in Virgin Galactic this month (but not his sponsor shares), argued that it would unfairly punish sponsors for the shortcomings of management. Read more.
