US IPO activity fell 59% in Q2. SPACs dried up following a regulatory crackdown.

In a regulatory crackdown of the burgeoning SPAC companies, the SEC introduced new legislation that called for classifying warrants as liabilities rather than the previously positioned equity instrument. This has made the world of regulatory reporting for SPACs complex, causing a sharp drop in US IPO activity.

The SPAC world is changing fast

Some key statistics that show the extent of impact:

Despite these discouraging numbers, the IPO market seems to be holding on robustly when compared to 2020. This is being considered as a positive move in the direction of growth by Financial experts.

This surge can be attributed to a massive stimulus in fiscal and monetary aspects that supports the US stock market. 2019 saw 242 IPOs being filed for, while 2020 saw 355. This comes as a striking contrast to 2021, where 582 IPOs were filed in the first half alone.

According to financial analysts, this points to the trend of SPACs being preferred as the ideal inroad to mergers with more prominent target companies.

Legal and finance teams within the organization should prepare for a deluge of new compliance measures that could be introduced by the SEC. Suppose a change from equity to liability has been announced; in that case, any firm will need to rework its accounts statements for all specified years to include changes acceptable to the SEC, a significant task for many private firms who may have dreamt of going public in the recent past.

Datatracks can help companies understand the different reporting demands of the SEC guide firms through the entire SPAC process. We have a flagship product – Rainbow– to help accounting, finance, and legal departments save time and resources.

Easy to use, on a secure cloud, and with keen collaborative nuances, Rainbow may be the answer to your SPAC concerns. Role hierarchies, intuitive controls, and validations, as well as a granular audit trail, make Rainbow one of the most effective compliance SaaS in the market today.

The SPAC world is changing fast. With effective financial reporting through the use of efficient technology from DataTracks, gain a definitive edge over competitors today!

Speak to an XBRL expert to find out how compliance reporting for your organization can be simplified.