Welcome to the first edition of The Friday 5 with Steve Greenfield, Founder and CEO of Automotive Ventures, an automotive technology advisory firm that helps entrepreneurs raise money and maximize the value of their companies. This weekly CBT News series recaps the week’s five most important actions and deals in automotive technology.
U.S. stocks wrapped up a banner month, with the S&P 500 posting its best August results in more than 30 years. The Standard & Poor’s 500-stock index capped a remarkable five-month winning streak as improving labor data, central bank maneuvers and Big Tech’s continuing dominance helped fuel a succession of milestones on Wall Street
A Special Purpose Acquisition Company, or SPAC, is a special purpose acquisition company, sometimes called a ‘blank check’ company, that has no operations but plans to go public with the intention of acquiring or merging with a company utilizing the proceeds of the SPAC’s initial public offering. SPACs make it relatively easier and more straight forward for a company looking to be public, as opposed to going through a more typical IPO process.
SPACs and electric vehicle startups seem to be a match made in dealmaker heaven. Canoo is set to merge with Hennessy Capital Acquisition Corp. IV, following in the footsteps of electric vehicle specialists Nikola, Fisker, and Lordstown Motors, which have also recently inked deals with special-purpose acquisition companies.
Many other companies are taking the opportunity to go public via SPAC. Online car seller Shift Technologies is set to go public through an acquisition by SPAC Insurance Acquisition Corp. Shift recently had their ‘Analyst Day’ for Wall Street analysts, which is a signal that they should be public soon.
The final deal for the week is KAR Global’s acquisition of online wholesale dealer auction BackLot Cars for $425 million dollars. The acquisition of BackLot Cars is an attempt by KAR, who owns the number two player TradeRev, to keep up with number one player ACV Auctions. $425M is a lot of money, but BackLot cars has been growing quickly, and the consolidation by TradeRev makes a lot of sense.
It’s an exciting time for automotive tech companies, and we should see a lot of M&A activity over the remainder of the year. Tune in next week for another recap.
Did you enjoy this episode of The Friday 5? Please share your questions and comments with Jim Fitzpatrick at jfitzpatrick@cbtnews.com.
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