For the past six or seven years, an important growth driver of large private equity funds was the fact that private company valuations were higher than public market valuations, so investors and employees of companies had incentives to stay private longer.
But in the past two years, technology company stock valuations have appreciated dramatically and reignited Silicon Valley’s interest in public capital markets. But private companies are closely examining the tradeoffs inherent in the IPO model and the incentives that various parties have (investors, founders/ employees, bankers). SPACs, or special purpose acquisition companies, and direct listings (see Spotify and Slack) have become increasingly common alternatives to IPOs when a company’s executives want liquidity or its investors want an exit.
In this piece, we look at recent trends in public market exits, weigh strengths and weaknesses of each model and speculate about which transport and logistics companies might be suitable for a SPAC.
The freight-tech venture capital market is maturing and several unicorns will require exits of some kind in the next few years. If low fees, known prices and the convenience of dealing with one set of investors continues appealing to companies with attractive long-term growth stories, we will see more SPACs in the future.
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