Special Purpose Acquisition Company
A publicly traded shell company formed to raise capital through an IPO with the sole purpose of acquiring or merging with a private operating company.
Definition
A Special Purpose Acquisition Company (SPAC) is a publicly traded shell company that raises capital in an IPO and then has a defined window (typically 18-24 months) to identify and merge with a private operating company in a 'de-SPAC' transaction. Several MedTech companies (e.g., Butterfly Network, Owlet, 23andMe) went public via SPAC during the 2020-2021 boom. The SEC's January 2024 final rule on SPACs materially raised disclosure and gatekeeper liability standards, dampening the market.What this means in practice
Post-2024, SPACs are no longer a faster or cheaper path to public markets for most MedTech companies. Many de-SPAC MedTechs traded poorly post-merger, reshaping investor appetite.- •Treating projections in the de-SPAC proxy as marketing rather than as Section 11 liability exposure.
Related terms
Grouped by themeEditor's picks
· Hand-selected related conceptsValuation ratio applied at exit, e.g., enterprise value to revenue.
First sale of a company's stock to public investors via a registered SEC offering, typically on NYSE or Nasdaq.
Any transaction that converts illiquid private-company equity into cash or freely tradable securities, typically IPO, M&A, or secondary tender.
More in Investment & Finance
· Same categoryAn independent fair-market-value appraisal of common stock used to set tax-compliant strike prices for employee stock options.
Adjustment that protects investors if the company raises a future round at a lower price.
Interim financing between priced rounds, usually convertible.
Rate at which a company spends cash, typically expressed monthly.
Primary references
3 sources- 1
SEC, SPAC Final Rule (2024)VerifiedSECsec.gov
- 2
SEC Final Rule 33-11265, SPACs, Shell Companies, and ProjectionsVerifiedSECsec.gov
- 3
NVCA Model DocumentsVerifiedNVCAnvca.org
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