SPAC The Deck: Why the Control Exerted by SPAC Sponsors Subjects De-SPAC Transactions to Entire Fairness Review

Special purpose acquisition companies (SPACs), otherwise known as blank check companies, are corporations created to raise capital from investors with the express purpose of using such capital to acquire an already existing business. Much like a traditional merger, the transaction between the SPAC and the target company (formally called the “Initial Business Combination” or colloquially the “de- SPAC transaction”) is highly scrutinized in shareholder litigation. However, Delaware courts have not definitively established under which standard these de-SPAC transactions should be reviewed. This Note examines the SPAC structure, evaluates the arguments for the respective standards, and ultimately concludes that Delaware courts should review de-SPAC transactions under the entire fairness standard.

Further, this Note argues that SPACs can rebut the presumption of entire fairness and earn business judgment review by following the steps set forth in the seminal decision of Kahn v. M & F Worldwide Corp., which have been found to be applicable to a wide range of corporate transactions.