SPAC ‘Fairness’ Reports Are Anything But Fair for Shareholders

SPAC shareholders were short-changed by an advisory industry that often recommended mergers that weren’t in their interests, according to an analysis of the struggling investment vehicles.

Independent advisers called in to judge the fairness of blank-check deals were typically smaller shops that provided opinions that had “virtually no substance,” Andrew Tuch, a law professor at Washington University in St. Louis, wrote in the paper.

The problem arises from the incentives involved. The SPAC sponsors and board members that contract advisers have a financial interest in pushing through mergers as they receive discounted shares in the new company. ...