Break out the Champagne! Goldman is doing a SPAC

Stick a fork in any remaining taint associated with shells and reverse mergers on Wall Street - it's done. The leading firm on the Street, Goldman Sachs Group, has decided to underwrite a $350 million SPAC, and make some major changes to the typical SPAC structure.

As discussed in the Wall Street Journal today, the big change is with respect to SPAC management. Most SPACs require management to put up as much as 2-4% of the total money to be raised, and then get 20% ownership of the SPAC. Goldman's deal, called Liberty Lane Acquisition Corp., has management putting up less, about 1% of the total raise, and they are getting a much smaller percentage ownership in the SPAC- about 7.5%.

In addition, Goldman is taking a 6% commission rather than the typical 7%. Finally, instead of an offering unit of a share of common stock and a warrant, which are traded separately, Goldman's units will include a share of common stock and a half a warrant.

Two of the criticisms that have at times been made of SPACs include the large management stake and the dilutive effect of the warrant overhang. Goldman clearly has studied this market carefully and determined to address both, all to the benefit of SPAC investors. It will be very interesting to see if this affects how future SPACs underwritten by other firms are structured or whether this will just become "the way Goldman does it."

As I have blogged on recently, the proliferation of SPACs is a win-win for all in the RM space. The fact that what most consider to be the most venerable player in finance is ready to enter the reverse merger world is both astonishing and a very significant milestone.