SPACs face a wide range of hurdles as they go through the IPO and merger and acquisition (M&A) process, including regulatory, legal, and business challenges. That is why insurance is a critical piece in a SPAC company’s life cycle.
A piece of good news this year is that the price of D&O insurance for SPAC IPOs is much more reasonable now than at the height of the 2021 SPAC frenzy, Woodruff Sawyer notes.
D&O insurance mitigates the common risks that directors and officers of a SPAC and its target company may encounter. This can include lawsuits from their public company shareholders, and investigations and enforcements from the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ).
Representations & warranties insurance (RWI) also plays a key role in competing for and completing a SPAC business combination. SPACs can present a more attractive offer to their target when their deal is backed by a reps and warranties policy.
Woodruff Sawyer’s Guide to D&O Insurance for SPAC IPOs, 2023 Edition outlines the process of obtaining the right type of coverage for SPACs and target companies for each stage of the life cycle. Read more.
