The pending acquisition of all the stock of Software Acquisition Group II in exchange for a minority of the stock of Otonomo Technologies, an operating business, raises the issue of whether the doctrine of “continuity of business enterprise” can be applied by the IRS against exchanging U.S. SPAC shareholders, writes Alan Lederman of Gunster, Yoakley & Stewart.
The deal calls for Otonomo to acquire all the shares of S-SPAC from the S-SPAC shareholders, who will in exchange receive originally issued Otonomo shares, Bloomberg reports. Since Otonomo’s valuation immediately after the exchange is projected by the parties to exceed $1 billion, and S-SPAC holds $172.5 million in cash, the exchanging S-SPAC shareholders will receive only a modest minority of the post-issuance Otonomo shares.
The article delves into the tax implications of a share exchange. Read more.
