Each passing day brings additional reports of growth-stage companies looking to go public through special purpose acquisition companies, or SPACs, rather than through traditional IPOs or of prominent investors raising funds for a new SPAC. This approach to becoming publicly traded can provide benefits to companies and sponsors alike, but participants in this market—including SPAC sponsors—should be aware of the liability risk in connection with their roles, as recent litigation involving several SPACs demonstrates. SPAC sponsors therefore should be mindful of steps they can take to mitigate these risks.

Risks for SPAC Sponsors in Connection With a De-SPAC

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