SPAC Success Can Hinge on This Single Factor

For founders looking to take their company public, special purpose acquisition companies (SPACs) offer a less risky, shorter alternative to traditional IPOs, if a few best practices are observed. In a SPAC, companies are formed in order to raise capital in an initial public offering and then uses the cash to acquire a private company, thereby taking it public, usually within a two-year time frame.

The process recently has become popular, especially because SPACs allow founders to avoid the extensive disclosures mandated by the traditional IPO process. Often, SPAC investors don’t even know the startup they will be acquiring–earning SPACs the nickname of “blank-check companies.” In 2021, there were 30 percent more SPAC issuances than traditional IPOs, according to The Financial Times.

But if you’re considering a blank-check deal, keep in mind that there’s one factor that is the best determinant of success. According to Wolfe Research, SPACs led by “experienced operators,” or CEOs with direct operating experience in the industry of the company being acquired, had greater returns on average than those that did not. The research found that just one year out, SPACs with experienced operators averaged a 73 percent rally, whereas those lacking an industry veteran suffered a 14 percent loss on average.

As reported by CNBC, a rather volatile market led some SPAC deals to unravel, causing companies to settle for less-than-optimal targets or change the deal all together. For this reason, the U.S. Securities and Exchange Commission warned investors in March to re-consider putting money in SPACs, especially those run by celebrities.

“It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment,” the SEC wrote on its website. That’s why if you’re considering a SPAC, don’t be swayed by big dollar amounts or celebrity names. Instead, think carefully about the experience that the blank-check company leaders are bringing to the table.

By Brit Morse, Assistant editor, Inc.

Source: SPAC Success Can Hinge on This Single Factor | Inc.com

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Critics:

Special Purpose Acquisition Company  also known as a “blank check company“, is a shell corporation listed on a stock exchange with the purpose of acquiring a private company, thus making it public without going through the traditional initial public offering process. According to the U.S. Securities and Exchange Commission (SEC), “A SPAC is created specifically to pool funds in order to finance a merger or acquisition opportunity within a set timeframe. The opportunity usually has yet to be identified”. SPACs raised a record $82 billion in 2020, a period sometimes referred to as the “blank check boom”.

Because a SPAC is registered with the SEC and is a publicly-traded company, the general public can buy its shares before the merger or acquisition takes place. For this reason they’ve been referred to as the ‘poor man’s private equity funds.’

Academic analysis shows the investor returns on SPACs post-merger are almost uniformly heavily negative (however, sponsors at the flotation of the SPAC can earn excess returns), and their proliferation usually accelerates around periods of economic bubbles, such as the everything bubble in 2020–2021, when the volume and quantity of capital raised by SPACs set new all-time records.

SPACs generally trade as units and/or as separate common shares and warrants on the Nasdaq and New York Stock Exchange (as of 2008) once the public offering has been declared effective by the SEC, distinguishing the SPAC from a blank check company formed under SEC Rule 419. Commonly, units are denoted with the letter “u” (for unit) appended to the ticker symbol of SPAC shares.

Trading liquidity of the SPAC’s securities provide investors with a flexible exit strategy. In addition, the public currency enhances the position of the SPAC when negotiating a business combination with a potential merger or acquisition target. The common share price must be added to the trading price of the warrants to get an accurate picture of the SPAC’s performance.

References

How Entrepreneurs Can Address Unconscious Bias

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Unconscious bias (also known as implicit bias) refers to unconscious forms of and stereotyping based on race, gender, sexuality, ethnicity, ability, age and so on. It differs from cognitive bias, which is a predictable pattern of mental errors that result in us misperceiving reality and, as a result, deviating away from the most likely way of reaching our goals.

In other words, from the perspective of what is best for us as individuals, falling for a cognitive bias always harms us by lowering our probability of getting what we want. Despite cognitive biases sometimes leading to discriminatory thinking and feeling patterns, these are two separate and distinct concepts.

Cognitive biases are common across humankind and relate to the particular wiring of our brains, while unconscious bias relates to perceptions between different groups and are specific for the society in which we live. For example, I bet you don’t care or even think about whether someone is a noble or a commoner, yet that distinction was fundamentally important a few centuries ago across . To take another example — a geographic instead of one across time — most people in the U.S. don’t have strong feelings about Sunni vs. Shiite Muslims, yet this distinction is incredibly meaningful in many parts of the world.

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As a frequent speaker and trainer on diversity and inclusion to address potential unconscious discriminatory behavior, I regularly share in speeches that black Americans suffer from harassment and violence at a much higher rate than white people. Often, some participants (usually white) try to defend the police by claiming that black people are more violent and likely to break the law than whites. They thus attribute police harassment to the internal characteristics of black people (implying that it is deserved), not to the external context of police behavior.

In reality, and as I point out in my response to these folks, research shows that black people are harassed and harmed by police at a much higher rate for the same kind of activity. A white person walking by a cop, for example, is statistically much less likely to be stopped and frisked than a black one. At the other end of things, a white person resisting arrest is much less likely to be violently beaten than a black one. In other words, statistics show that the higher rate of harassment and violence against black Americans by police is due to the prejudice of the police officers, at least to a large extent.

However, I am careful to clarify that this discrimination is not necessarily intentional. Sometimes, it indeed is deliberate, with white police officers consciously believing that black Americans deserve much more scrutiny than whites. At other times, the discriminatory behavior results from unconscious, implicit thought processes that the police officer would not consciously endorse.

Interestingly, research shows that many black police officers have an unconscious prejudice against other black people, perceiving them in a more negative light than white people when evaluating potential suspects. This unconscious bias carried by many, not all, black police officers helps show that such prejudices come — at least to a significant extent — from internal cultures within police departments, rather than pre-existing racist attitudes before someone joins a police department.

Such cultures are perpetuated by internal norms, policies and training procedures, and any police department wishing to address unconscious bias needs to address internal culture first and foremost, rather than attributing to individual officers. In other words, instead of saying it’s a few bad apples in a barrel of overall good ones, the key is recognizing that implicit bias is a systemic issue, and the structure and joints of the barrel needs to be fixed.

The crucial thing to highlight is that there is no shame or blame in implicit bias, as it’s not stemming from any fault in the individual. This no-shame approach decreases the fight, freeze or flight defensive response among reluctant audiences, helping them hear and accept the issue.

With these additional statistics and discussion of implicit bias, the issue is generally settled. Still, from their subsequent behavior, it’s clear that some of these audience members don’t immediately internalize this evidence. It’s much more comforting for them to feel that police officers are right and anyone targeted by police deserves it; in turn, they are highly reluctant to accept the need to focus more efforts and energy on protecting black Americans from police violence, due to the structural challenges facing these groups.

The issue of unconscious bias doesn’t match their intuitions, and thus they reject this concept, despite extensive and strong evidence for its pervasive role in policing. It takes a series of subsequent follow-up conversations and interventions to move the needle. A single training is almost never sufficient, both in my experience and according to research.

This example of how to fight unconscious bias illustrates broader patterns you need to follow to address such problems in order to address unconscious bias to make the best people decisions. After all, our gut reactions lead us to make poor judgment choices, when we simply follow our intuitions.

Instead, you need to start by learning about the kind of problems that result from unconscious bias yourself, so that you know what you’re trying to address. Then, you need to convey to people who you want to influence, such as your employees or any other group or even yourself, that there should be no shame or guilt in acknowledging our instincts. Next, you need to convey the dangers associated with following their intuitions, to build up an emotional investment into changing behaviors. And finally, you need to convey the right mental habits that will help them make the best choices.

Remember, a one-time training is insufficient for doing so. It takes a long-term commitment and constant discipline and efforts to overcome unconscious bias.

Gleb Tsipursky

By:

Source:https://www.entrepreneur.com

Want to know more about Unconscious Bias? Go to our Website: http://bit.ly/2pRNhQL For more information, please contact: info@enei.org.uk, 020 7922 7790, or visit http://www.enei.org.uk

These 15 Behaviors Will Make You Almost Irreplaceable At Your Workplace – Nina Angelovska

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Probably at our workplaces we have all heard many times that “no one is irreplaceable”, though it is more likely to hear it more often in big corporations where people are still considered as “positions”. However it is not the technology, the product or the process that makes a company great, it is the people behind that great solution. And while some might think that “irreplaceable” is a very strong statement I think everyone would agree there are some people who make themselves very difficult to replace. These are the people who enjoy a competitive advantage because they are an invaluable asset to any company……..

Read more: https://www.forbes.com/sites/ninaangelovska/2018/10/30/these-15-behaviors-will-make-you-almost-irreplaceable-at-your-workplace/#7e3cf4911a54

 

 

 

 

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