Comments on: The Great SPAC Scam: Why SPACs Are a Great Deal for Celebrity Sponsors, But Not Companies or Normal Investors

By: Kevin English

Kevin English — Thu, 24 Aug 2023 23:13:03 +0000

You missed a key reason why SPACs under perform — really reverse mergers in general. They are used because the company that wants to be public doesn’t have good enough numbers to go public on the merits of their current balance sheet. You are starting with a lemon that couldn’t pass the scrutiny required to undergo the traditional approach to going public.

By: M&I - Brian

M&I - Brian — Wed, 14 Jun 2023 19:29:26 +0000

In reply to Kal. Sorry to hear that. We do try to warn people about scams and unscrupulous deals and other activities on this site, but it doesn't always get circulated widely...

By: Kal

Kal — Mon, 12 Jun 2023 08:07:15 +0000

In the case with Sharecare, a company where I was an employee, your comments regarding SPACs rings true. I am not an educated investor, only an employee who received a decent amount of shares that were worth over 100k on day 1 of their going public. It’s been a year or so now since opening at $10 /share and they have ‘tanked’ as you put it probably due to the market not liking the deal. If I had known about the SPAC SCAMS prior to Sharecare going public, I’d have my 100k.. Right now I don’t think there’s enough in my account to tip the mailman for Christmas. Thanks for the article.

By: M&I - Brian

M&I - Brian — Tue, 01 Mar 2022 15:33:53 +0000

In reply to Alan De Anda. I can't really say because I haven't followed SPACs in other markets/regions. But I think whenever you have an instrument that gives one set of investors a huge advantage over everyone else, there's the potential for trouble. So this answer depends heavily on how SPACs are implemented elsewhere, and whether the same terms exist there.

By: Alan De Anda

Alan De Anda — Fri, 25 Feb 2022 00:36:36 +0000

Hi, Brian.
Thanks for such useful article. I work in a shopping center firm in Mexico, which in 2020 was the first company in the country to go public through a SPAC, just in time to be our life jacket for covid. Since I was aware of the implications of our SPAC proccess, I thougth of his pitfalls and the moral risks involved. Fortunatelly, at this day, none of the investors nor sponsor had withdrawn, even with covid severe troubles.
Do you think SPAC malpractices in US will inherently be repeated in other markets like Mexico? Is the SEC turning a blind eye on that malpractices?

Kind regards,

By: M&I - Brian

M&I - Brian — Tue, 07 Dec 2021 01:04:12 +0000

In reply to Kevin. Yes, I think post-merger SPACs are more reasonable. There is still some regulatory risk because the acquired companies haven't gone through the typical IPO process. But at least post-merger, you know what you're dealing with and are no longer making a speculative bet on a shell company that may or may not ever do something useful.

By: Kevin

Kevin — Mon, 06 Dec 2021 18:56:54 +0000

Thanks for all this info Brian. Do you like SPACs better for retail investors if they were to wait till after the SPAC merged with a private company before they invested?

Discovered a company I liked as an investment target post-merge but wary because they went through the SPAC process.

By: M&I - Brian

M&I - Brian — Wed, 01 Sep 2021 17:37:01 +0000

In reply to Richard Silverstein. So, I can't comment on those specific companies because I do not know them and have not followed their story. There is less scrutiny when a company goes public via a SPAC because the registration process is different, and investors who bought SPAC shares don't necessarily know what they're getting because SPACs are vague about their acquisition targets. This is why there are so many pending lawsuits and other legal action around SPACs currently.

By: Richard Silverstein

Richard Silverstein — Wed, 01 Sep 2021 01:51:23 +0000

Thanks for such a comprehensive account of SPACs. Two controversial Israeli cyber-hacking/malware companies, Cellebrite and NSO Group are using, or plan to use SPACs to go public. They are extremely controversial and NSO in particular has had a checkered history both on the financial market and in terms of the damage its products cause.

Could you tell me if there would be any particular benefit to a company facing such negative scrutiny in using a Space rather than an IPO? Is there less regulatory scrutiny? Less bad publicity for a potential investor to have to withstand?

By: M&I - Brian

M&I - Brian — Wed, 11 Aug 2021 22:32:32 +0000

In reply to Iwan. Thanks!