SPAC Booms Dries Up as SEC Warning Curtails Year's Hottest Trend

The new SEC rules classifying warrants as liabilities rather than equity have the blazing SPAC market in a temporary freeze. Deals in progress continued, but new SPAC IPOs paused as the companies review their financial statements for any material changes and address any necessary restatements.

Partner Michael Poveda noted that it’s too early to tell if every accounting adjustment will require SPACs and the companies they have taken public to restate past financial statements.

This will depend upon whether the new accounting standard will have a material change to the company's financial information. According to Poveda, that will vary for every SPAC and also for the companies that went public via SPAC merger. “It’s not a one-size-fits-all analysis,” Poveda said. “That analysis is going to be one that requires a lot of consultation.”

But companies are not alone in this endeavor. Accountants, lawyers, and valuation specialists are working behind the scenes to plan for the future, Poveda said. “We’re spending a lot of time burning the midnight oil, staying on top of it and working with not only our clients, but everyone in the ecosystem to help make sure we get to the right place,” Poveda said.

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