Exploring SPACs: Considerations for Latin American and Caribbean Entrepreneurs about Special Purpose Acquisition Companies

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Lucas, Caroline;
Rodríguez, Sebastián;
Sánchez, Fernando;
Buitrago, Jose
Jun 2023
Special Purpose Acquisition Companies (SPACs) can offer great advantages for companies planning on going public, including shortening times compared with conventional pathways to initial public offerings (IPOs). But SPACs can also present many risks, including subpar returns to investors and incomplete deals. Recently, SPACs have gained great media attention as markets saw a SPAC bubble boom and bust between 2020 and 2023, regulatory updates, and changing views about the value of SPACs.

This report intends to offer Latin American and Caribbean entrepreneurs and investors a better understanding of SPACs as well as a regional context. How do SPACs work? Are SPACs a desirable exit vehicle for Latin American and Caribbean startups? What drove these recent trends and how were they reflected in the region? What continues to make SPACs attractive pathways for company growth and investments? What lessons can we draw after the recent bubble bust? What considerations must a LAC entrepreneur take into account when exploring SPACs? These are just some of the questions that this report addresses based on research about SPAC deals and interviews with Latin American and Caribbean SAPC sponsors, investors, and entrepreneurs.