For special-purpose acquisition companies (SPACs), call it the year-end scramble. And perhaps, for B2B firms, platform and payments-focused players among them, the trend may have legs into 2022.
To that end, and as reported by CNBC, SPAC issuance on the public exchanges stands at a level that’s not been seen since earlier in the year — since March 2021, to be exact.
The site reported that 57 SPACs began trading last month, trailing the 109 seen in March. But a rebound is a rebound: The latest tally is a doubling of the rate of new issues that went public in September.
At least part of the slowdown has to do with the fact that some firms, before going public, had to backtrack and restate their financial documents, per new accounting rules from the Securities and Exchange Commission (SEC) related to warrants, which give certain holders the right to buy or sell stock at a certain, predetermined price over a defined length of time.
It may be the case that the spate of new issuances is coming as a “logjam” of sorts, with firms having to comply with the SEC, has been cleared. But the increased activity comes as markets remain relatively buoyant, and are up double-digit percentage points year to date.
By going public into a rising tide, the thinking is that the new issues will get caught in an “updraft,” too. With a SPAC, the intent is to raise money through the IPO in order to buy another company. For the target firm – the one that is going public – the merger represents a relatively speedier way to gain a public listing than the traditional route.
Drilling down a bit into the actual activity, some themes emerge. As has been detailed in past writeups tracking SPAC activity, platforms and other relatively high-tech companies have come to market via SPAC. And there have been ripples of activity within the B2B space – as tracked by PYMNTS, there have been 45 work-related listings (including SPACs and traditional IPOs) year to date, second only to banking.
Read more: SPAC Listings Target Blockchain, FinTech
Among the notables coming public in past months: At the beginning of the year, Billtrust completed a SPAC merger with South Mountain Merger Corp. The company focuses on accounts receivable (AR) automation and integrated B2B payments.
More recently, Payoneer went public via SPAC in a $3.3 billion deal and is focused on cross-border B2B. And supply chain management firm E2open went public through the same strategy.
To be sure, there have been B2B firms that have gone the “traditional” IPO route. In the fall, for example, ResTech company Toast went public, having been valued at about $20 billion. Ditto for AvidXChange.
More details: POS ResTech Firm Toast Eyes IPO up to $717M
If there’s one commonality among these firms – putting aside whether they tread down the SPAC path or the traditional IPO path – it’s that B2B is going public, in a way that emphasizes the tailwinds of the great digital shift. The shift has been especially apparent among SMBs, PYMNTS has found.
Many of these firms lack the resources to do the technical heavy lifting of digitization on their own – which means they partner with many of these aforementioned B2B firms, thus giving those providers top- and bottom-line momentum.
PYMNTS has found that 76% of small and medium-sized businesses (SMBs) say the pandemic has prompted them to enhance their digital payments capabilities, leveraging everything from POS technology to virtual cards focused on spend management.