Almost two long years following the announcement of proposed rules revising the framework for regulating initial public offerings and business combinations of special purpose acquisition companies (SPACs), the US Securities and Exchange Commission (SEC) adopted in a three-two vote final rules on the topic. While much has changed in the SPAC market since the SEC’s proposed rules were announced – notably a cooling in the face of regulatory and economic headwinds – the final rules largely enact the SEC’s proposals from March 2022.

On 4 October 2023, Deputy Attorney General Lisa Monaco of the U.S. Department of Justice announced a new DOJ-wide policy that seeks to provide greater certainty as to the potential benefits to acquirers that uncover criminal conduct at a target company. The DOJ’s Mergers & Acquisitions Safe Harbor Policy for voluntary self-disclosures provides greater certainty to acquirers who self-report within the safe harbor period, fully cooperate with the DOJ in its investigation, and engage in requisite, timely, and appropriate remediation, pay restitution, and disgorge any ill-gotten gains.

As an unfortunate consequence of the deterioration of the US-China relationship, more and more Chinese companies are divesting and exiting their US-based operations. In order to execute a smooth exit from US operations, Chinese companies should retain a good US financial adviser. Careful consideration should also be given to how the asset is packaged, preparing stand-alone audited financial statements, and optimizing the business for post-closing operations. Chinese companies should be prepared to use US law and engage in longer negotiations as a result. CFIUS-related requirements and risks should be understood during the early stages of the deal.

On 30 March 2022, the Securities and Exchange Commission approved proposed rules relating to special purpose acquisition companies (SPACs) and released an accompanying fact sheet. Work on the final rules will begin following the public comment period, which ends on the later of 31 May 2022 and 30 days following the publication of the proposing release in the Federal Register.

Baker McKenzie and the Financial Times co-created a multimedia series, the FT Big Deal, to explore new trends shaping transactions and how to unlock value. In this series, Baker McKenzie lawyers are joined by industry thought leaders to discuss the key developments and issues shaping the future of global transactions.

Deals involving SPACs have drawn much attention in recent years due to numerous advantages, including the availability of already-raised capital and a quicker timeline than the standard IPO process. In conjunction with ACC Southern California Chapter, Baker McKenzie partners, Derek Liu, Perrie Weiner, Michelle Heisner and Steve Canner give a primer on de-SPAC transactions as a pathway for private companies to access the public markets, discuss current market trends and some of the regulatory and litigation risks associated with this deal structure.

Partners Michael Fieweger and Derek Liu were featured in Private Equity International’s Keynote Interview, entitled “Public deals for private equity”.

In this interview Michael and Derek discuss reasons why SPACs present an attractive opportunity for Private Equity investors, but they consider the potential challenges for mid-market PE funds and potential conflicts they can create for private equity firms. They also give their opinion on the reasons for the decline in PIPEs and provide forecasts for how the SPAC market will evolve into 2022.

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