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04/15/2021
SPACs must comply with SEC accounting rules for warrants
On April 12, 2021, the Securities and Exchange Commission (SEC) set forth its views on the accounting for warrants containing certain specific features that, for most special purpose acquisition companies (SPACs), were previously classified and accounted for as equity instruments. The new interpretation will in many cases require SPACs to classify these warrants as liabilities and report them at their estimated fair values at each reporting period, with corresponding adjustments reflected in the SPAC’s Statements of Operations. The SEC’s announcement may necessitate restatements of previously filed financial statements.
CohnReznick has started assisting our SPAC clients with reevaluation of their previous accounting positions, valuations of warrants based on the revised positions, and performing SAB 99 analysis to evaluate materiality considerations to address the SEC’s new guidance.
What you should know, now
Contact
Stephen Wyss, CPA, Partner
646.625.5758
Anna Kamenova, Director, Transactions & Turnaround Advisory - Valuation Advisory
704.837.7599
Subject matter expertise
Jeremy Swan
Managing Principal - Financial Sponsors & Financial Services Industry
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SPACs: Alternative to Traditional IPO
This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.