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Special-purpose acquisition companies are under siege on a bewildering variety of legal and regulatory fronts, most recently in the form of three lawsuits declaring them outright illegal. Well, this is a step too far for the blank checks and the law firms handsomely profiting from them.

Kirkland & Ellis, one of the top legal advisers to SPACs, helped to organize other firms to issue the statement, which said the lawsuits are “without factual or legal basis.” Some who signed on, like Simpson Thacher & Bartlett, have comparatively little involvement with SPACs. They are protesting on principle, organizers said. “The market has already driven some reform,” said Christian Nagler of Kirkland & Ellis. “Otherwise it should be done by proposing rules and laws, not by lawsuits….”

“We really needed something powerful to take away that P.R. narrative,” said Joel Rubinstein of White & Case. Of course, the law firms defending SPACs are protecting millions of dollars in legal fees, as well as principles.

Of course, it may be too little, too late: Bill Ackman may agree that these lawsuits are total garbage, but he also knows that even total garbage can gum up the American legal system for well over the two years most SPACs have to find a partner. Therefore, win or lose in court, these lawsuits masterminded by a pair of prominent law professors, have already, in effect, won, especially coming, as they do, at a time when some other aspects of the blank-check project are getting a rather unpleasant once-over.

In such an environment, what is the enterprising company desiring a public listing without the hassle of a traditional initial public offering to do? Well, here’s an option:

The still relatively small group of companies that have made their debuts on U.S. exchanges through direct listings have, on average, outperformed the S&P 500 and a key broader index for initial public offerings during the same period, according to an analysis by University of Florida finance professor Jay Ritter…. In general, companies that choose this route tend to be in solid financial shape because they don’t need to raise capital through a traditional IPO.

Oh, just kidding: Those words don’t describe any company willing to even think about getting into bed with a blank-check vehicle.

A SPAC Counterattack [DealBook]
Direct Listings Have Paid Off for Investors So Far [WSJ]

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By Chris Potter (Flickr: 3D Judges Gavel) [CC BY 2.0], via Wikimedia Commons

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