Valuers Stand Ground in Clash Over Purchase Price in SPAC Merger

Business Valuation UpdateVol. 26 No. 8
August 2020
J. Russell Frawley III, MBA, CPA, ABV
fair value for financial reporting
purchase price allocation, fair value, fair value measurements, mergers and acquisitions (M&A)

Summary

A recent SPAC merger triggered a strong disagreement between a national valuation firm and the merged entity over the fair value of equity consideration issued for the target company. A special purpose acquisition company (SPAC) is a shell company that raises capital in an IPO and then acquires an operating company to form a new merged entity.