Are your SPAC warrants equity or liabilities?

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/

Contact Eton today to discuss how to value your SPAC warrants under ASC 820. Get your valuation work done right. The first time.