skip to main content

SPAC or PE Exit Decision Rides on Executives' Long Term Plans

SPAC or PE Exit Decision Rides on Executives' Long Term Plans

Although SPAC acquisitions for taking companies public has been the major trend over the last year, the traditional buy-out method through a private equity (PE) firm still remains a strong option. It all comes down to what executive's have in mind for the company's long-term goals.

Partner Dan Jones noted there are definitive benefits to choosing the PE route, noting that PE firms are increasingly opting for long-term investments by consulting in-house expertise for strategies to increase valuations.The change in approach can help ensure the company’s growth and positive financial performance.

In addition, the PE route allows for executives of the acquired company to potentially retain control of the operations and pursue the established business strategy more readily. “[Avoiding] stock markets limits a company’s exposure to intense capital-market competition, enabling it to follow its strategic plans without the constant pressure to perform well financially to maintain its stock prices,” he said. 

In particular, it's an attractive option for small and mid-sized companies who would struggle to maintain the administrative and compliance burdens associated with a post-IPO presence. "The PE route is gaining popularity among such companies for funding of long- and short-term plans,” Jones said.

This isn't to say a PE exit is always the right answer. The deals are potentially less profitable and generally have a smaller pool of potential buyers.

If a company chooses to go the SPAC route, Jones said to understand that the leadership company may lose executive control and they must comply with the rules set by the SEC and other regulators. In addition, stock prices will be a constant factor for investors, so there is a very real pressure to perform well financially. “If a company’s valuation drops due to its poor financial performance, with SPACs there is a greater chance of knee-jerk reactions or changes,” Jones said.


Read the full article published by CFO Dive.


Please complete this form to hear from Dan Jones

Hide Firm Disclaimer


UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc., and its subsidiary entities. UHY Advisors, Inc.’s subsidiaries, including UHY Consulting, Inc., provide tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors” and “UHY Consulting”. UHY Advisors, Inc., and its subsidiary entities are not licensed CPA firms. UHY LLP, UHY Advisors, Inc. and UHY Consulting are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. “UHY” is the brand name for the UHY international network. Any services described herein are provided by UHY LLP, UHY Advisors and/or UHY Consulting (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

On this website, (i) the term "our firm", "we" and terms of similar import, denote the alternative practice structure conducted by UHY LLP and UHY Advisors, Inc. and its subsidiary entities, and (ii) the term "UHYI" denotes the UHY international network, in each case as more fully described in the preceding paragraph.