History shows that the best strategy here is usually to buy SPACs after they've announced a merger target but before the actual completion of the combination. Nov 16, 2021
If either deal falls through, those shares will only be worth the cash they represent – whether it's more or less than $6.67. We can be certain that these shares don't represent more than $10 in cash, so any SPAC deal that busts will quickly reflect its true value – somewhere under $10 per share. Jul 1, 2021
NVAC currently 24,168,800 shares outstanding.
Market Cap = 236,370,900 ($9.78 per share)
52 week low = $9.692
52 week high = $9.785
Average volume is 350k shares traded per day since 1/24/2022.
If a SPAC's managers can identify an appropriate acquisition target, they must then obtain approval through a shareholder vote. Investors are sent proxy materials disclosing the details of the proposed acquisition. A SPAC's public shareholders may vote in favor of the acquisition, or vote against the acquisition. If the shareholders vote against the acquisition, they may elect to have their shares converted into a pro rata portion of the IPO proceeds, which are held in an escrow account.
During the IPO stage, investors purchase units representing one or more shares of common stock and one or more warrants exercisable for one share of common stock at a discount to the offering price. Typically, a SPAC will trade as a single unit following the IPO. After a certain period, often 90 days following the IPO, the common stock and warrants trade separately.
Following the IPO, nearly all of the SPAC proceeds are held in an escrow account to be used to complete an acquisition. The escrow account typically invests in money market funds or short-term U.S. government securities. The SPAC assets are released from escrow when the shareholders approve an acquisition or the SPAC is dissolved.
Warrants (and presumably Rights) are exercisable only upon successful completion of an acquisition and typically will expire worthless if the SPAC is liquidated.
Naturally, an investment before the announcement of an acquisition is a bet on whether an acquisition target will be announced and whether it is an attractive investment.
FINRA research indicates that SPAC share prices slightly outpace the market on the day an acquisition target is announced.
FINRA research indicates that most SPAC share prices significantly lag the market after the acquisition is completed. (Bag Holders!).
If a SPAC's management identifies an appropriate acquisition target, it must then seek a shareholder vote. An acquisition by a SPAC typically requires the approval of at least 60 percent of the shareholders and some deals require 80 percent. Investors are sent proxy materials disclosing the details of the proposed acquisition.
SPAC sponsors, unless they have purchased shares of the SPAC's common stock, do not receive a pro rata distribution from the escrow account if an acquisition is not completed. In addition, they are typically prohibited from selling their shares in the secondary market prior to completion of the acquisition. These mechanisms, along with their 20 percent equity stake in the SPAC, may help to align management and investors' interest in completing an acquisition. However, SPAC managers have a strong incentive to buy a company, even at inflated values, since they will get 20 percent of the company at a nominal price.
Please note that my posts are for discussion only. They should NOT BE CONSIDERED AS ADVICE FOR YOUR OWN PERSONAL INVESTMENT CHOICES. ALWAYS do your own DD and feel free to question or validate my posts at anytime.
