Spotlight on SPACs: Regulatory Rut

The dramatic change in the SPAC regulatory environment left many companies scrambling to get their financials in order. Managing Director John Bautista and Principal Scott Norris have been in the thick of the action and spoke with Mergermarket on what they are seeing from the accounting side.

Bautista noted that the reclassification of warrants as liabilities may cause a material change in a deal’s valuation. If that happens, financials need to be restated. With so many factors to consider, SPAC management teams are varied in their response with some management teams taking a more cautious route, according to Bautista.

Norris is cautiously optimistic about the situation, especially with some firms and valuations teams putting aside competitive differences to resolve the latest issue. He acknowledged the impact was “quite a shock”, but all invested parties are collaborating to make this “just a short-term hurdle that hopefully we get through.”

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