Cooley published some insight today on how the SEC may be throwing another wrench into Wall Street’s SPAC transaction by cracking down on how accounting rules apply to a key element of blank-check companies.
In new guidance from the SEC, warrants, which are issued to early investors in the deals, might not be considered equity instruments and may instead be liabilities for accounting purposes. This guidance significant slow the pace of SPAC transactions until the issue is resolved.
The new guidance could clog up the SPAC spigot because SPACs that are already public and that have signed deals with targets may have to restate their financials.
Cooley’s article can be found here: https://cooleypubco.com/2021/04/13/accounting-guidance-spac-warrants/
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Chris co-founded Eton Venture Services in 2010 to provide mission-critical valuations to venture-based companies. He works closely with each client’s leadership team, board of directors, internal / external counsel, and independent auditor to develop detailed financial models and create accurate, audit-proof valuations.
