Analysts: SEC SPAC Proposals Will Leave Companies Worse Off

Mitch Nussbaum, co-chair of Loeb & Loeb’s Capital Markets and Corporate practice, served as a panelist at Maxim Group’s SPAC Business Combination Panel Discussion on March 30, 2022, which was recapped in an article published by Capital.com. The panelists discussed how proposed changes to U.S. SEC rules concerning SPAC IPOs and designed to shield investors from share dilution and reporting deficiencies will likely just increase redemptions, leaving the newly public company with less cash on hand and in a worse financial position after listing its shares.

“The SEC is saying the SPAC target is acting just like a company seeking an IPO,” Nussbaum said during the panel. “They think this is needed because of the proliferation of SPACs in the past few years.”

During the panel, Nussbaum noted that stable and sound target companies looking to go public through a SPAC merger should not be too concerned about the potential increase in redemptions. “We’ve seen increased redemptions in past business cycles," he said. “The good companies have done well.”