Starboard Value Acquisition Corp (NASDAQ: SVACU) is sliding onto NASDAQ this Friday, 11th September. Main Street does not focus on this SPAC as retail investors hone in on the trending blank check companies such as SHLL, SPAQ, and HCAC. However, some investors are contemplating a Starboard investment. Because if SVACU land an acquisition, then investing at IPO could potentially be the point of maximum financial gain. Thus, today’s article will breakdown the IPO for our readers and the risk/reward features of a SVACU investment.
Table of contents 1. Overview of the SVACU IPO 2. What you must know before investing in Starboard IPO
Breakdown of the Starboard Value Acquisition Corp IPO
Starboard is a blank check company, also known as a Special Purpose Acquisition Company (SPAC). Essentially Starboard’s sole intention is to acquire a company and bring it public through mergers, acquisitions, or stock purchases. In Starboard’s case, they are looking for a company in the technology, healthcare, consumer, industrial, and hospitality and entertainment sectors. However, before breaking down the IPO specifics, YIG strongly recommends investors read our simple explanation of SPAC’s here.
SVACU will IPO at $10.00 per unit. Each Starboard unit comprises of one stock and one-sixth of a redeemable warrant. UBS securities LLC, Stifel, Nicolaus &Company, Incorporated are acting as join book-running managers for the offering. The offering of SVACU securities should close on the 14th of September, 2020.
What you must know before investing in Starboard value acquisition corp
Before I begin, I remind our viewers that this is not financial advice but rather investment commentary from extensive research
Investors must understand the enormous risk/reward play-off in a SVACU investment. The IPO signifies Starboard arriving on the NASDAQ, but that is it for the moment. Think of the IPO as SVACU walking up to the podium and saying we are going public, keep your ears tuned for potential acquisition talks. Volatility is likely to be high come Friday’s IPO, as SPAC’s often receive decent volume because of their potential value. (opinion not advice)
Think of a SVACU investment as buying a metal detector and searching for gold. Starboard could acquire a high-growth company, which could send the stock skyrocketing. In which investors have struck gold. Especially, as SPAC’s SHLL, SPAQ, and Vector IQ all soared after their acquisitions. However, Starboard could fail to acquire a company, resulting in the PIPE investors receiving their money back.
Consequently, you bought a faulty metal detector and a potential capital loss. Overall, the SPAQ boom, SVACU’s broad acquisition target, could potentially see early investors come out on top. However, YIG does stress the importance of factoring in the risk of no acquisition into your investment.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Senior Manager of YIG.