Special Purpose Acquisition Companies (SPAC) have been around for decades, serving as alternative avenues to the traditional initial public offering (IPO) process. But it has only been within the last year that SPACs have really taken off and regained popularity within the mergers and acquisitions space.
The record pace of SPAC IPO’s has continued in 2021 with over 200 SPACs raising in excess of $65 billion in capital through the first 12 weeks of the year. Though SPACs have undeniably been gaining major traction and attention, not everyone is fully aware of the financial and legal risks that come with launching them.
For those who are contemplating starting a SPAC, it is crucial to understand the financial exposures and risks they could potentially face. Liabilities will pop up throughout a SPAC’s lifecycle that could be accompanied with severe legal and financial implications for founding directors and officers (D&O). It is important that they not only have a sound understanding of these serious challenges, but also of the tools and products from an insurance perspective that can be used to resolve and mitigate these liabilities.
With securities class action landscapes shifting and new D&O exposures emerging, founding SPAC directors and officers will find themselves, their personal assets, and their investments directly at risk if litigation was to arise. It is important that directors and officers fully understand the available insurance options and programs that are designed to protect them and their financial interests.
Last month, ACG National Capital sponsored the “NFP SPAC Practice Trends, Strategies, and Liabilities” webinar to examine the current risks and liabilities SPACs are facing and how teams can use insurance to protect their personal assets and investments.
Topics of discussion included:
- Current litigation trends in SPACs
- Risks and liabilities throughout the course of the SPAC lifecycle from IPO to ultimate business combination
- Due diligence and the use of Representation and Warranties Insurance
- Current state of the insurance market’s supply, rates and products
Webinar panelists included:
- Adam Greenwald, Corporate Services Advisor, NFP
- John McNally, Managing Director, NFP
- Andrew Pendergast, Senior Vice President, SPAC & GPL, Practice Leader, Merger & Acquisition Risk Solutions, NFP
Click the play button below to watch the Webinar in its entirety: