Global Accounting Considerations for Special Purpose Acquisition Companies
With the explosion of Special Purpose Acquisition Company (SPAC) initial public offerings (IPO) in 2020 and 2021 comes the subsequent rise in mergers or De-SPAC transactions between SPACs and operating companies. As of the second quarter of 2022, over 500 US-listed SPACs are still searching for target companies to complete their De-SPAC transaction. With so many SPACs trying to find quality target companies, their target searches are expanding to markets outside of the United States. Combining with a non-US target company often means encountering different accounting and reporting standards and regulations that be navigated throughout the De-SPAC process. Similarly, non-US listed SPACs will encounter many of the same accounting and reporting complexities when merging with a US target company.
Things to Consider
There are a number of accounting and reporting items to consider when a US-listed SPAC combines with a foreign target company. Some of the main considerations include:
- A non-US target company merging with a US SPAC will be subject to US securities laws and regulations, including US Securities and Exchange Commission (SEC) rules and regulations.
- Non-US target companies may qualify as a foreign private issuer (FPI), in which case the reporting requirements under SEC rules will be different than those of a domestic issuer.
- Accounting standards used by the target company may be different than those of the SPAC (i.e. IFRS versus US GAAP), and therefore a reconciliation of the two, or a conversion from one accounting standard to the other, may be required.
- Often service providers and working group parties are located across the globe and can be difficult to coordinate.
How Centri Can Help
- Serve as the central point of contact for the working group, ensuring that responsibilities are clearly defined and critical deadlines are met.
- Provide technical accounting and financial reporting support for the De-SPAC transaction and necessary SEC filings.
- Assist in transitioning target company financial statements from IFRS or other international accounting standards to US GAAP or reconciling between accounting standards within De-SPAC registration statements.
- Provide audit support for SPAC and target companies throughout the De-SPAC process.
- Tailor a company’s on-going financial reporting requirements based on FPI or domestic issuer status.
About Centri Business Consulting, LLC
Centri Business Consulting provides the highest quality advisory consulting services to its clients by being reliable and responsive to their needs. Centri provides companies with the expertise they need to meet their reporting demands. Centri specializes in financial reporting, internal controls, technical accounting research, valuation, mergers & acquisitions, and tax, CFO and HR advisory services for companies of various sizes and industries. From complex technical accounting transactions to monthly financial reporting, our professionals can offer any organization the specialized expertise and multilayered skillsets to ensure the project is completed timely and accurately.
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