Incentive Structure of Special Purpose Acquisition Companies

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Abstract

Special Purpose Acquisition Companies (‘SPACs’) are shell companies that are set up with the purpose of raising financing from capital markets in order to acquire and/or merge with a business. Although the idea behind SPACs is similar to private equity funds, their financing and investment methods, investor safeguards and incentive structures differ considerably. This article explains the distinctive features of SPACs and discusses the SPAC incentive structure especially with regard to management compensation schemes and value dilution problems affecting investors.

Keywords

Special Purpose Acquisition Company (SPAC) Private equity Shell company Initial public offering Business combination 

Notes

Acknowledgements

The author would like to thank Dr. Carsten Gerner-Beuerle, Dr. Felix Steffek, Mr. Batuhan Özşahin and the participants of the Vanderbilt Law School 18th Annual Law and Business Conference for insightful discussions and their valuable feedback and Mr. Kerem Çelikboya for his kind assistance with referencing.

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Copyright information

© T.M.C. Asser Press 2018

Authors and Affiliations

  1. 1.Faculty of LawIstanbul Bilgi UniversityIstanbulTurkey

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