Enzolytics Inc (ENZC)

[falon]

To qualify for a SPAC merger a company should ideally meet the following criteria:


https://clearthink.capital/blog/required-criteria-to-qualify-for-spac-merger/

Reasonable Valuation of at Least $250M
From a practical standpoint, SPACs typically acquire companies that are valued at a minimum of 3X the amount of cash in the SPAC. This is due to the dilutive effect of the sponsor’s carry in the SPAC. If the valuation of the target company gets too close to the amount of cash in the trust, the dilution associated with the sponsor’s carry becomes too large relative to the overall transaction size.

As most SPACs are $100M+, with a few exceptions under $100M, we recommend companies only pursue SPAC mergers if they are able to justify a valuation of $250M or greater.


Ability to Justify Valuation
Anyone can provide a number they think their company is worth, but to get market acceptance the company must be able to justify its valuation. This can be done using comparable companies’ valuations, relevant metrics, etc.

If a company is unable to effectively justify their valuation, it is likely the transaction will have very high redemptions and the stock will fall post-close.


Must Have a Clear Use of Proceeds
If a SPAC transaction is successfully completed, the target company receives a large influx of capital. The company must be able to show a clear use of proceeds and benefit from this capital.