Special Purpose Acquisition Company (SPAC)
Special purpose acquisition Company (SPaC)
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SCP & CO has leveraged its expertise in healthcare and technology to take advantage of near-term market dynamics and favorable long-term secular trends in digital health by forming SCP & CO Healthcare Acquisition Company, a special purpose aquisition company, or SPAC.

Information about SPAC’s
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There are two primary audiences who should educate themselves about SPAC’s

Company Founders

Company Founders

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Funding Sources (VC/PE/IB)

Funding Sources (VC, PE, IB)

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Investment Thesis

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There are numerous advantages to high-growth, middle market businesses using a SPAC as its vehicle to access the public markets.  While in the past, these special purpose acquisition companies were a seldom-used, rarely mentioned financial instrument, they have achieved broad market acceptance and are now a commonplace, if not preferred method of IPO.

Expertise

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Demand

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Connectivity

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Growth

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Liquidity

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Commitment

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Corporate profiles suited for SPAC’s
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An exit to the public markets is well-suited for high growth, middle-market companies that have received multiple rounds of venture capital funding.  Additionally, there have been several successful spinoffs to SPAC’s of operating businesses within existing publicly-traded companies.

Late Stage VC

Late Stage VC

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Carve-Outs

Carve-Outs

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WHY WORK WITH SCP & CO?
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Since its inception in 2002, SCP& CO has completed eighty transactions totaling $1.8+ billion of aggregate transaction volume.  Over half of the firm’s transactions have been platform acquisitions, financings, or add-on’s for SCP& CO’s Principals’ buyout control investment vehicles.

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Special purpose acquisition companies (SPACs) are very popular among company founders. SPACs are products tuned to these volatile times. They are often faster and simpler than a traditional IPO and offer shareholders flexibility as to whether they want to cash out or keep shares with the company. There is an enormous amount of capital looking for a place to go: over $100 Billion in equity capital was raised by SPAC’s in 2020 and 2021 YTD.

Top founders, executives, and investors alike are launching them, including venture capitalist Chamath Palihapitiya of Social Capital, MGM Holdings CEO Harry Sloan, Pershing Square Capital Management founder Bill Ackman, LinkedIn co-founder Reid Hoffman and even former House Speaker Paul Ryan.

For founders of a target company going public, it's less of a headache. SPACs are simpler than IPOs. Since the transaction is a merger, the founders of the target company need to negotiate with only one party, the acquirer. No roadshow is required to peddle shares. When the deal is done, the company goes public at a set valuation. Basically, the entire IPO process is much easier.

Special purpose acquisition companies (SPACs) are very popular among venture capital, private equity, and investment banking firms for several reasons.

Investors in the target company get faster returns. In a traditional IPO, investors often face a six-month lockup, during which time they can't sell their shares. With a SPAC, they can trade positions with long-term institutional holders at the outset of the deal. They also avoid any overhang on the stock before they're able to sell. That tends to weigh down prices in a traditional IPO.

Private equity firms are especially looking to get involved in SPAC’s because they say they can see a more immediate and definitive return on their investments. They can consolidate or invest in a company and flip it to a SPAC, because then they're out, and they don't still hold paper after it goes through the IPO.

SCP & CO Healthcare Acquisition Company has the expertise on its management team and board to ensure a successful transition to the public markets for a company in the digital health space:

SCP & CO Healthcare Acquisition Company has captured investor demand for digital health:

SCP & CO and our board of directors are wildly connected in the healthcare space

SCP & CO has a proven track record of successful growth in healthcare and technology:

A SPAC business combination provides greater liquidity for the target company than a traditional IPO:

Our sponsor team and board of directors are committed to a long-term relationship with the target founders:

In 2020, SPACs became widely accepted and were used to bring many disruptive, high-growth companies to the public markets. In the US, SPACs helped private companies raise about $80 billion in 2020, representing a 462% year-on-year jump and surpassing the $67 billion raised via traditional IPOs in 2020. The trend accelerated in 2021 with companies raising $64 billion via IPOs and secondary equity offerings in the first three weeks of 2021.

The acceptance of SPAC's could not be better for late-stage technology companies. Target companies are now faced with two choices, stay private and raise Series D, E, or subsequent round funding, or go public via reverse-merger with a SPAC (SPAC transactions are a relatively easier route to public markets compared with traditional IPOs). Public listing via a SPAC helps companies streamline capital raising, get a better valuation (at least in current ‘risk-on’ market conditions) and focus on future growth rather than the next venture round of funding. Many venture investors see SPACs as a viable option for their companies to go public, sometimes earlier and easier than would be possible in a traditional IPO.

Special purpose acquisition companies (“SPAC”) are tailor made to be the vehicle for a carve-out IPO. Most SPACs are seeking high-growth, middle market businesses with Enterprise Values ranging from approximately $250 million to $5 billion. Nearly every SPAC has a specific industry focus with an accomplished board of directors well suited to guide and advise the management team of the target. The divesting company saves significant time and effort by using a SPAC to IPO, rather than handling the process themselves. The cash value of the transaction is negotiated beforehand, and the sellers receive higher valuations and greater liquidity than a traditional IPO. Public companies may look at this model as an alternative to a traditional spin-off, IPO or sale of a division, with this structure offering the benefit of an anchored public market valuation for the division.