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Tax Challenges Impacting the SPACs Boom

July 12, 2021

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This episode of the Tax Beat focuses on SPACs – Special Purpose Acquisition Companies – that are taking the investment world by storm. SPACs are a new way to get private companies to the public equity market.  Nearly half of all IPOs in 2020 were SPACs and the trend is accelerating in 2021. Management teams and sponsors start with a new, shell corporation listed on a public stock, raise funds by selling shares to the public, and then find and acquire an operating company. Sounds straight forward, but the transactions details and tax consequences can be far from simple. Tax Beat hosts, Brooks and Sarah, discuss the tax challenges for SPACs with Cherry Bekaert’s Chris Truitt, Partner and Leader of the Firm’s Tax Transaction Advisory Service team, and Barry Weins, Director, specializing in transaction tax services.

The conversation includes:

  • 1:49: Overview of SPACs
  • 6:48: Responsibilities of Founders and Sponsors
  • 10:08: Tax Issues of De-SPACing
  • 12:49: Tax Considerations for Target Companies
  • 20:03: Impact of Location on Taxes

Related Guidance: 

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