Marcum has represented issuers and worked with underwriters and targets of special purpose acquisition companies (SPACs). We have wide-ranging experience in both initial public offerings (IPOs) and subsequent business combinations entered into by such companies. This experience gives us a thorough understanding of the intricacies of the SPAC process.
- Marcum is one of the top audit firms in the SPAC industry.
- Marcum has a dedicated SPAC service group comprised of professionals in Marcum offices across the country.
- Marcum has been one of the top auditors in the specialized SPAC IPO market since 2015, auditing more than 250 SPAC IPO transactions between 2015 and 2021.
- 1. IPO Phase
- 2. Search Phase
- 3. De-SPAC Phase
- Registrant entity is formed.
- Founder’s shares are issued.
- Financial statements including comprehensive notes are prepared by management.
- A substantially complete Registration Statement (including financial statements) is delivered to auditors.
- Auditor completes the audit under PCAOB (“Public Company Accounting Oversight Board”) standards, review registration statement, and authorize confidential submission of draft registration statement (DRSA) with the SEC.
- SEC initial review period commences (generally 30 days).
- Auditor assists with response to SEC comments.
- Auditor reviews updated registration statements and authorizes confidential submission with the SEC.
- SEC comments are cleared.
- Registration statement declared effective.
- Underwriting agreement executed.
- Auditor issues comfort letter to underwriter.
- SPAC commences trading.
- Auditor issues bring-down comfort letter immediately prior to close.
- Trading closes.
- Auditor completes post-closing balance sheet audit and issues opinion to be included in a current report on Form 8-K, to be filed within 4 days.
- SPAC is now subject to the reporting requirements of the Securities Exchange Act of 1934 and must file 10-Ks and 10-Qs with the SEC.
- Auditor is required to review each 10-Q, audit the 10-K, and authorize filing with the SEC.
- Auditor is also often engaged for transaction services, including due diligence and/or quality of earnings services on SPAC targets.
- Auditor may be consulted on structuring matters and financial statement requirements to execute transactions.
- SPAC has signed a definitive agreement with a target.
- Proxy statement is prepared:
- Audited financial statements.
- Unaudited interim financial statements.
- Unaudited combined pro-forma financial statements.
- Auditor reviews proxy statements and authorizes filing with the SEC.
- If the auditor for the target is different from the SPAC auditor, both audit firms will review the proxy statement and authorize filing.
- SEC comments and response process commences.
- Comments are cleared.
- Proxy statement is mailed.
- Vote on transaction takes place.
- Transaction closes.
- Following the close of the transaction SPAC auditor may be required to reissue audit report in connection with various filings with the SEC
PCAOB Audit Vs. GAAS Audit
- GAAS audit – conducted under Generally Accepted Auditing Standards.
- GAAS audit focuses more on “what” the numbers are and a PCAOB audit additionally focuses on “why” and “how” the numbers got there.
- Auditor independence rules are much stricter under PCAOB Standards.
- Significant limitations on services an auditor can provide in connection with a PCAOB standard audit.
SPAC Accounting & Reporting Advisory Services
Marcum LLP has extensive SEC knowledge and experience to assist you in navigating SEC rules and regulations which give rise to complex issues and questions.
- Pre-Filing Support
- Registration Statement Prepartation
- File and Respond to SEC Comments and Super 8-K
- Post-Merger Continuing 1934 Act Assitance
- Continuing Support
- Technical assistance with SPAC transaction
- Prepare or review public company and Regulation S-1 compliant financial statements
- Analyze/Revisit critical accounting areas and documentation
- Prepare financial statements and analysis of carve-out financials for S-1 compliance
- Draft proxy statement
- Draft tie-out binder supporting information and footnotes in the registration statement
- Assist in completing the GAAP and SEC checklists
- Assist with SEC preclearance matters
- Provide assistance to resolve comments received from the SEC and external auditors to understand the substance of the comment and resolve in filing
- Assist in drafting amendments to the registration statement to reflect SEC comment responses and any material developments
- Assist in drafting and review of Super 8-K, ensuring compliance with timing and required disclosures
- SEC Reporting – Assist in preparation of the Company’s Form’s 10-K, 10-Qs, and 8-K (optional)
- Assist with establishment of policies for month-end, quarter-end, and year-end close process (optional)
- Help develop governance and compliance practices (optional)
- Draft SOX compliance program (optional)
- Technical assistance with accounting for:
- PIPE funding
- Rights of various preferred, founders, and common stock
- Forward purchase commitments
- Other complex debt and equity vehicles
- De-SPAC preparation and acquisition transaction assistance
SPAC IPO Readiness: IPO Focus Areas
"Hot Button" Issues for SEC/SEC COmment Trends
- Revenue recognition
- Equity and stock based compensation
- Common stock valuation
- Complex financial instruments and related assumptions
- Acquisition – business combination
- Related party transactions
- Disclosure quality and completeness
- Segment reporting
Equity/ Stock Based Compensation
- Analyze the cap table and ensure all stock ownership records are up to date
- Understand the terms of all warrants and convertible instruments and determine how filing an IPO will affect their treatment
- Review the articles of incorporation and by-laws
- Understand and evaluate the capital structure
- Prepare for SEC comments on common stock valuation
Other Areas To Consider
- Goodwill and intangible assets with related impairment charges, if any
- Foreign currency translation issues
- Inventory valuation and reserves
- Earnings per share calculations
- Management’s discussion and analysis
- Recently issued accounting standards
- Compensation and related disclosures
- Pro Forma issues
Quarterly Financial Information and Financial Statement Disclosures
- Preparation of quarterly financial statements
- Review Financial statement disclosures – prepared in accordance with US GAAP and includes disclosures specific to SEC registrants
- Segment Reporting
- Management basis if accounting judgment
- Compute EPS for all periods
- Any rationale for non-GAAP measures
- Resolve and address all other critical accounting matters
- Drafting of registration statement - F-Pages & MD&A
Representative List of Marcum’s SPAC Initial Public Offerings
|Issuer||Led Underwriter||Offering Size||IPO Date|
|PWP Forward Acquisition Corp. I||Citigroup||$200,000,000||March 10, 2021|
|Agile Growth Corp.||Citigroup/Jeffries||$200,000,000||March 10, 2021|
|Digital Transformation Opportunities Corp.||Barclays||$200,000,000||March 10, 2021|
|Colonnade Acquisition Corp. II||Barclays/Deutsche Bank||$200,000,000||March 10, 2021|
|ESM Acquisition Corporation||Credit Suisse Securities||$200,000,000||March 10, 2021|
|SVF Investment Corp. 3||Citigroup/UBS/Duetsche Bank/Cantor Fitzgerald/Mizuho||$200,000,000||March 9, 2021|
|Independence Holdings Corp.||Citigroup/Deutsche Bank||$200,000,000||March 9, 2021|
|SVF Investment Corp. 2||Citigroup/UBS/Duetsche Bank/Cantor Fitzgerald/Mizuho||$200,000,000||March 9, 2021|
|First Reserve Sustainable Growth Corp.||Barclays/Goldman Sachs||$200,000,000||March 5, 2021|
|Tribe Capital Growth Corp.||Cantor Fitzgerald||$200,000,000||March 5, 2021|
REPRESENTATIVE SPAC MERGER TRANSACTIONS
|Stock Symbol||Company Name||SPAC Entity|
|HCCO||SOC Telemed||Healthcare Merger Corp.|
|PTAC||Porch.com||PropTech Acquisition Corporation|
|SAQN||CuriosityStream||Software Acquisition Group Inc.|
|ORSN||Ucommune||Orisun Acquisition Corp.|
|NFIN||Triterras Fintech||Netfin Acquisition Corp.|
|CPAA||Advantage Solutions||Conyers Park II Acquisition Corp.|
|PIC||CXL Fleet||Pivotal Investment Corporation II|
|SMMC||Billtrust||South Mountain Merger Corp.|
|HYAC||Arko Holdings||Haymaker Acquisition Corp. II|
|NEXT||NextDecade Corp./||Harmony Merger Corp.|
Get to know more about
Special Purpose Acquisition Companies (SPAC)
Other SPAC focused services
- Pre-Filing Reports
- Registration Statement Preparation
- File and Respond to SEC Comments and Super 8-k
- Post-mMrger – Continuing 1934 Act Assistance
- Continuing Support
- Sarbanes-Oxley Readiness and Compliance
- Controls Optimization
- Corporate Governance Assessment
- Regulatory Risks (HIPAA, Anti Corruption)
- Human Resource Compliance
- Federal and State Regulations
- Risk Assessment and Audit Plan Development
- Enterprise Risk Management
- Internal Audit Outsourcing and Co-Sourcing
- Information Technology Audits
- Internal Audit Creation and Transformation
- Internal Controls Consulting
- Data Analytics for Internal Audit
- Quality Assurance Reviews
- Vendor, Royalty and Construction Audits
- Fraud/Forensic Investigations
- Technical Accounting Projects
Valuation & Business Analytics Services
- Tax Reporting
- Financial Reporting
- Fairness Opinions and Trransaction Advisory
- Litigation Support
- Complex Financial Instruments
- Business Case and Feasibity Analysis
- Real Property and Tangible Assets
- Structured Products