Are SPACs Back?

Are SPACs Back?

The largest US-based retailer of cupcakes has agreed to sell to a Special Purpose Acquisition Company (SPAC) called 57th Street General Acquisition Corp for $66 million.  A SPAC is a publicly traded company that raises capital for the purpose of buying companies – think of a private equity company only the money comes from investors who buy stock in the company.  The purchase price on this deal is reported by Business Wire to be 16.4 times forecasted 2011 Adjusted EBITDA, and, from what I can tell, it is about 26 times 2010 adjusted EBITDA.

Two takeaways for me:

1.) The resurgence of SPACss portends more robust belief about economic growth and a willingness to buy again

2.) These are high acquisition multiples that tell me these investors are betting on this company growing meteorically.

Both good signs for the M&A market.


Capstone Strategic is the meeting point of passion and process in the field of mergers and acquisitions. Founded in 1995 by CEO David Braun, Capstone meets the unique demands of mid-market companies and their corporate growth initiatives. We help clients achieve their dreams through proactive strategic growth programs and successful acquisitions. Put simply, we help companies grow.

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