Taking longer to find a target does not seem to correlate to a greater likelihood of litigation for a SPAC IPO, at least not yet. But the SPAC deals that wound up in litigation were larger than deals that did not.
For this final piece in the series discussing commonalities among special purpose acquisition companies that end up in litigation, I sliced the Bloomberg Terminal data on completed SPAC mergers and Bloomberg Law Dockets data across duration and size.
Not Necessarily Slower, But More Expensive
For the 36 SPAC-targeted lawsuits that were announced and closed in 2020 through Q1 2021, the time from the SPAC’s IPO effective date to the merger announcement date averaged only just more than a year.
Surprisingly, the average was slightly more than 16 months for the nearly 50 non-litigated SPAC deals (where data was available).
The average announced total value of the merger, however, was larger for the litigated group than for the non-litigated group. Where data was available, the average announced total value for litigated SPACs was $1.26 billion, versus $588 million for 43 non-litigated SPACs. This difference suggests that when there is more money on the line, litigation might be the final bet.
That’s All ... For Now
SPAC litigation is an evolving area, with more litigants filing cases every month. To search and set an alert for additional cases involving SPACs, use this search of Bloomberg Law’s Dockets.
Bloomberg Law subscribers can find related content on our In Focus: Special Purpose Acquisition Companies resource.
If you’re reading this on the Bloomberg Terminal, please run BLAW OUT <GO> in order to access the hyperlinked content.