Abstract
In 1992 David Nussbaum with the support of the law firm Graubard Miller devised the formula of the specified purpose acquisition companies (SPAC): a financial vehicle that has the flexibility and functionality typical of the blank-check companies, which could provide investors with the right protections and guarantees in order to be a reliable instrument. The first SPAC officially debuted in 2003 through the Initial Public Offering (IPO) of Millstream Acquisition Corporation which then completed the merger with Nations Health in September 2004. In 2005 the first SPAC got listed in European Market and in 2011 the first SPAC joined in the Italian market. The aim of this research is to investigate the features of the Italian SPACs System because it’s becoming a large phenomenon in Italy. This new type of investment is able to fit the needs of small-medium Italian companies, to solve crisis difficulties, to find new finance to grow, to be a good instrument for opening up venture capital and institutional investors respecting the past business history and the safeguard of corporate control. The study, then, performs an analysis on the Italian SPACs by examining their target firms, stock performance before and after the business combination and the impact of the SPACs on SME corporate governance models. These results will be compared with those of other research developed by academic literature.
Highlights
The official definition provided by the Securities Exchange Commission (SEC) explains how the blankcheck companies are companies without a specific business strategy or purpose that indicated the desire to achieve a merger or acquisition with one or more companies, entities or other unspecified parties
For example Jenkinson and Sousa (2009) individuated six characteristics of specified purpose acquisition companies (SPAC) over traditional Initial Public Offering (IPO): 1) a small group of senior management raise capital in advance and search for a target; 2) indirect way for small investors to get into a hedge fund type investment; 3) since a SPAC do not have any history, articulated or specific business plan a part of the declaration that proceeds raised will be used for an acquisition in 18/24 months, the listing process is easier and quicker; 4) more transparent listing prospectus; 5) explicit statements about their conflict of interests; 6) approval by shareholders and at least 70/80% of them need to approve otherwise the company is liquidated
In Italy, the potential of the SPAC is yet to be discovered since it is a modality of investing the capital that arrived in the national context later than the large number of blank-check companies that already populated the American market in the 1980s
Summary
The official definition provided by the Securities Exchange Commission (SEC) explains how the blankcheck companies are companies without a specific business strategy or purpose that indicated the desire to achieve a merger or acquisition with one or more companies, entities or other unspecified parties. The birth of the SPAC is perfected precisely in this regulatory context with the need to create a financial vehicle that has the flexibility and functionality typical of the blank-check companies, which could provide investors with the right protections and guarantees in order to be a reliable instrument and free from the reputation of previous companies that were perhaps exempt from the stringent Rule 149 All these characteristics were merged in 1992 in the new project of David Nussbaum (founder of the investment bank EarlyBirdCapital Inc.) and with the support of the law firm Graubard Miller, he devised the formula of the specified purpose acquisition companies. The practice of setting up SPACs in low-tax countries (tax heavens) is widespread
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
