SPAC v. Direct Listing v. IPO?

What’s the difference between an IPO, a special purpose acquisition company (SPAC), and a direct listing?

[By staff reporters]

IPOs are a 6–12 month journey where a company works with investment banks and underwriters, who buy a bunch of shares and then sell them to investors in the public market during the actual IPO. Early investors are able to liquidate their shares, and the company raises new funds.

Direct listings skip the underwriting hullabaloo. But without that stability guarantee, direct listings can result in a more volatile opening. Some companies, like Coinbase, find that it’s worth it to keep their hard-earned money out of bankers’ hands.

SPACs, aka “blank-check companies,” offer yet another alternative path to public markets. A SPAC is a shell company that raises money through the traditional IPO process, then merges with a private company and takes it public. 

MORE: https://medicalexecutivepost.com/2019/06/24/what-is-a-direct-listing-process-on-wall-street/

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5 Responses

  1. SPACs

    SPAC popularity is shooting through the roof! The market is seeing huge increases in SPAC utilization. But like everything I’m finance – there could be additional risks to consider…

    https://www2.deloitte.com/us/en/pages/audit/articles/spac-risks-trends.html

    JOE

    Like

  2. Ana Miller
    Many thanks for the “like.”
    ME-P

    Like

  3. SPACs:

    “It’s a killer,” Buffett said about the rise of special purpose acquisition companies. Buffett said SPACs have made it even harder for Berkshire to strike a deal at an attractive price. “Frankly we’re not competitive with that. It won’t go on forever.”

    via Ann Miller RN MHA

    Like

  4. What is a “Cross-Over” Fund

    A “crossover” fund invests in both private and public companies.
    THINK: Tiger Global Fund.

    Betty

    Like

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