SPAC or PE Exit Decision Rides on Executives’ Long-Term Plans: Report

Flying money

he continuing popularity of special purpose acquisition company (SPAC) mergers is giving private company executives an attractive exit option. But whether going public using that fast-track approach is better than a traditional private equity (PE) buyout depends on what you want after the exit, specialists tell CFO Dive. 

A typical PE deal is driven by value-creation during the hold period, which can mean any number of things, depending on the investment strategy of the acquiring firm. It can mean the PE firm working hand-in-hand with the portfolio company team, offering up its expertise and resources and building long-term value, or it can mean cost-cutting or even an executive shake-up.  

With SPACs, although there can be an executive shake-up, the sponsoring entity typically goes into the deal with the view the target company has the right leadership and business plan in place. Read more.

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