The Drawbacks of SPACs for Exiting SMEs Owners
Taking a company public can deliver a strong valuation and other benefits. But the landscape has shifted.
SPACs (special purpose acquisition companies) became popular for fast, cheaper public listings. A SPAC raises funds via IPO with the goal of acquiring the operating company afterwards to take it public smoothly.
But SPACs have drawbacks:
> Appetite Declining. Investor appetite waning means disappointing valuations. And investors can back out, prompting instability.
> Preparation. Company must be ready to operate publicly within months of LOI, a distraction.
> Costs. Banking fees, compliance staffing, reporting add up despite savings.
> Loss of Control. Share price and strategy largely beyond your control after public listing. Tough for hands-on SME owners.
> Compliance. Many SMEs not equipped for public company scrutiny, sinking valuations.
Better SPAC alternatives exist for going public. But for exiting, consider:
✔️ Trade sale to strategic or PE buyer — more profitable, less hassle.
✔️ Recapitalisation to free equity while retaining control.
✔️ PE secondaries to sell shares instantly, privately.
✔️ MBOs led by current management.
Each exit path has unique tradeoffs for owners. What’s right for your UK business?
#sme #business #ukbusiness #exitlaunchpad #M&A #mergers #acquisitions
