The SPAC Litigation Environment: Recent Trends and D&O Insurance Implications

The SPAC Litigation Environment: Recent Trends and D&O Insurance Implications

Andrew J. Pendergast is a Managing Director and SPAC & general partnership liability (GPL) Practice Leader of the Merger & Acquisition Risk Solutions group, at NFP. NFP provides tailored insurance solutions for SPAC clients, making certain that directors’ and officers’ personal assets, the SPAC entity’s balance sheet and the target business are all adequately covered against loss. Key Takeaways: * Andrew summarizes what directors and officers (D&O) insurance is and how it applies to SPACs today. [2:19] * The frequency of securities class action claims brought against SPACs has increased over the past 18-24 months. Andrew shares additional insights from NFP’s historical analysis of securities lawsuits. [4:30] * The SEC’s anticipated new rules aiming to increase investor protection for SPAC transactions will have broader implications in the litigation environment. [11:00] * Target companies need to understand their securities liabilities pre-close. Andrew provides an overview of what this involves. [16:21] * Andrew outlines how and why to get creative when structuring a D&O insurance policy. [20:40] * Andrew reveals when the best time is to engage an insurance broker in the SPAC transaction process. [24:05] Additional Resources: * BDO Knows SPACs [https://www.bdo.com/resources/bdo-knows-spacs] * NFP’s Special Purpose Acquisition Company (SPAC) practice [https://www.nfp.com/property-and-casualty/specialties/private-equity-group/spac-and-general-partnership-liability] * BDO’s Accounting & Reporting Advisory Services [https://www.bdo.com/services/assurance/accounting-advisory-services/overview] * Michael Stevenson’s bio [https://www.bdo.com/our-people/michael-stevenson]

Unpacking the SEC’s New Proposed Rules on SPACs and De-SPAC Transactions

Tim Kviz is the National Managing Partner of BDO’s SEC Services Practice. Tim has more than 25 years of experience in accounting, financial and SEC reporting, auditing and business management. He assists clients with complex accounting and SEC reporting matters in connection with IPOs, business combinations, dispositions, restructurings, debt and equity financings, and other transactions. Key Takeaways: * The proposed new rules are a mix of largely expected items, codification of guidance the SEC was already enforcing, and some new changes. * One of the most significant changes is enhancing disclosure requirements. * The new proposed rules seem to provide investors with better disclosures and a more nuanced understanding of the transaction and how it came about. Some disclosures moved from one document to another, and others were enhanced to align with a traditional IPO. * Investor protection is a main objective of these proposed rules. Tim explains how investors may benefit and whether any projections of future results are based on historical results, or just forecasts. * Tim believes the proposed rules will improve the quality of SPAC transactions, bringing the deal up to the level of an IPO. Additional Resources: * BDO Knows SPACs [https://www.bdo.com/resources/bdo-knows-spacs] * Tim Kviz’s bio [https://www.bdo.com/our-people/timothy-kviz] * Michael Stevenson’s bio [https://www.bdo.com/our-people/michael-stevenson] * The BDO Center for Accounting and SEC Matters [https://www.bdo.com/resource-centers/bdo-center-for-accounting-and-sec-matters] * BDO’s SEC Registration and Filings Services [https://www.bdo.com/services/assurance/public-company-audit/sec-registration-and-filings] – led by Tim Kviz * BDO’s Accounting & Reporting Advisory Services [https://www.bdo.com/services/assurance/accounting-advisory-services/overview] - led by Michael Stevenson * SEC Proposes Rules to Enhance Reporting and Due Diligence in SPAC Transactions [https://www.bdo.com/insights/assurance/accounting-and-reporting-advisory/sec-proposes-rules-to-enhance-reporting-and-due-di]

Complexities and Challenges of SPACs in the Valuation of Targets

Notes Anthony Alfonso is the National Managing Principal of the firm’s Valuation & Capital Market Analysis Practice and Valuation Global Leader of BDO’s International Corporate Finance Group. He has more than 25 years of financial services experience providing valuation and transaction advisory services to a wide range of organizations and industries. Key Highlights: Anthony discusses the challenges encountered because of complexities created by the pandemic. [1:41] Anthony talks about the income approach vs. market approach and how it impacts valuation. [3:00] Owners are more attracted to being able to negotiate the value of their company vs. following the traditional IPO path. Mike shares that there needs to be an agreement as to what that valuation is. [6:20] Anthony shares how SPAC sponsors determine a quality target. [7:40] Anthony talks about fairness opinions on de-SPAC transactions. [9:00] Anthony summarizes the importance of fundamentals, taking caution when looking at non-GAAP financial metrics, and getting a fairness check. [9:51] Additional Resources: BDO Knows SPACs [https://www.bdo.com/resources/bdo-knows-spacs] Anthony Alfonso’s bio [https://www.bdo.com/our-people/anthony-alfonso] Michael Stevenson’s bio [https://www.bdo.com/our-people/michael-stevenson] BDO’s Valuation & Capital Market Analysis Practice [https://www.bdo.com/services/business-financial-advisory/valuation-capital-market-analysis/overview] - team led by Anthony Alfonso BDO’s Accounting & Reporting Advisory Services [https://www.bdo.com/services/assurance/accounting-advisory-services/overview] - team led by Michael Stevenson Access the full recording from the original webinar – SPAC Hacks: Successful Transition into Public Listings [https://www.bdo.com/events/spac-hacks-successful-transition-into-public-listi]

Ensuring a Successful Merger with a SPAC

Join BDO’s National SPAC Practice Co-Leader, Michael Stevenson, as he sits down with Amy Rojik, National Managing Partner of Corporate Governance at BDO, to discuss board considerations for ensuring a successful merger with a SPAC. Notes Amy Rojik is a National Managing Partner at BDO who directs BDO’s Center for Corporate Governance, overseeing the firm’s communications and governance efforts. Amy has more than 25 years of experience in the auditing profession, engaging with financial reporting executives, audit committees, and board members. Key Takeaways: Amy shares the two-step process before getting into a merger. [1:30] Successful SPACs have often relied on the experience of their board members or having an independent company to consult. [5:02] The true function of a board is oversight. Amy shares the difference between oversight and operational and financial management. [9:14] The board composition of any company is extremely important, and a board needs to think about the honest assessment of a board’s functionality. [12:25] Michael summarizes the list of must-haves and considerations for board members. [13:33] Some of the emerging skillsets board members need to have. [14:00] Additional Resources: BDO Knows SPACs [https://www.bdo.com/resources/bdo-knows-spacs] Amy Rojik’s bio [https://www.bdo.com/our-people/amy-rojik] Michael Stevenson’s bio [https://www.bdo.com/our-people/michael-stevenson] The BDO Center for Corporate Governance [https://www.bdo.com/resource-centers/governance] BDO’s Accounting & Reporting Advisory Services [https://www.bdo.com/services/assurance/accounting-advisory-services/overview] - team led by Michael Stevenson Access the full recording from the original webinar – SPAC Hacks: Successful Transition into Public Listings [https://www.bdo.com/events/spac-hacks-successful-transition-into-public-listi]

The Status of SPAC Markets Today

Michael Stevenson serves as the National Practice Leader for BDO’s Accounting & Reporting Advisory Services group. Demetrios Frangiskatos is the Assurance Managing Partner in BDO's Northeast region. Together, they co-lead BDO’s National SPAC Practice. Key Questions Answered: * What is the status of the SPAC market today? [1:12] * How has the incorporation of new regulations impacted SPACs’ value? [3:55] * What is the difference between permanent equity vs. mezzanine equity? [8:12] * How can decision-makers navigate SPACs more effectively? [12:12] * What should a de-SPAC company be thinking about in the first 12 months? [12:42] * How will the regulatory markets affect the SPAC space? [18:15] * Where is the future of SPACs headed? [20:15] Resources: * BDO Knows SPACs [https://www.bdo.com/resources/bdo-knows-spacs] * Demetrios Frangiskatos’ bio [https://www.bdo.com/our-people/demetrios-frangiskatos] * Michael Stevenson’s bio [https://www.bdo.com/our-people/michael-stevenson] * BDO’s Accounting & Reporting Advisory Services - team led by Michael Stevenson [https://www.bdo.com/services/assurance/accounting-advisory-services/overview] * Access the full recording from the original webinar – SPAC Hacks: Successful Transition into Public Listings [https://www.bdo.com/events/spac-hacks-successful-transition-into-public-listi]